By on December 2, 2009

Business is business (

Car guys know exactly what’s wrong with GM: car guys like them aren’t running the show. Otherwise, every Chevrolet, GMC, Buick, and Cadillac would look “great” (no need to be more specific) and dust the competition. Hence Bill Ford’s decision to hire Alan Mulally to take over as CEO came as a real disappointment. Obviously, he would have done better hiring anyone who truly knows and loves cars better than a Lexus-driving Boeing executive.
Sorry, CarNut4CEO. It just wasn’t so in Ford’s case. And it’s just not so in GM’s case, either.

Every auto enthusiast has done it. We’ve all figured we’d do a much better job running GM than the suits in the Ren Cen. In design competitions, we’d pick the sexy themes, not the ugly ones. Focus groups wouldn’t have a say. We’d command the engineers to create direct-injected twin-charged dual-variable-cammed engines that rev smooth as silk and sing songs of pure adrenaline. There’d be no more slushboxes. No more front-wheel-drive, either. Every suspension would be firmly damped. Every bucket seat would be solidly bolstered. Cheap plastic would be banned and every bit of trim perfectly aligned.

The problem is, most car buyers don’t know much about VVT. What they do know is they aren’t going to pay much for things that have no obvious impact on getting from Point A to Point B. Their eyes, fingertips and rear ends don’t see and feel the same things as those of car guys.

What do most car buyers want? Guess at your own peril. You can scrape the surface by asking them. You can observe how they use their cars at rest stops and parking lots. You can try to walk in their shoes, perhaps even going so far as to don costumes that simulate the experience of being encumbered by arthritis, pregnancy, or nails and heels. Do this long enough and intensively enough, and you might figure them out. Then you’ve got to translate what you’ve learned into the thousands of details that comprise a car — from the curve of the fender to every last button and switch. Do this right and all of these bits cohere into a “gotta have” for that car buyer (who hopefully isn’t unique).

You don’t have nearly enough time to do all of this yourself. The thousands of decisions that constitute an automobile’s design require contributions from hundreds of people. Ideally, the people who know the customer and the people who style and engineer all of the bits work together seamlessly, accepting and melding one another’s expertise to create an appealing, coherent whole. And let’s not forget the dreaded “bean counters”: this whole has to be affordable. Achieving this synthesis might be the most difficult task in the world.

Nor can you simply hire the best and the brightest and simply toss them into a room together. A program team needs a leader to pull everyone together around a customer-based product vision. Even this mid-level executive can’t know everything or get fully involved in every decision. He’s got to develop a team capable of creating this synthesis, and he’s got to be able to let them do it.

GM’s CEO is at least three levels removed from the corporation’s product program managers, who are themselves a few levels above the grunts in the trenches. If, after a twenty-slide PowerPoint presentation, this CEO can make better decisions about product details than the team that has lived and breathed the product and market, then something is wrong. It doesn’t matter how car-smart this CEO is. If the program team is decent, then no exec’s that brilliant. If the team isn’t decent, then game over.

Nevertheless, senior car company execs frequently step in and make such decisions. The media legitimizes this meddling, lauding gutsy top execs who make snap product decisions. There’s no glory in letting the grunts do their jobs. Finally, corporate politics can push each executive to prove that he knows more than the other guy does while second-guessing every decision the other guy makes.
In this environment, it takes a tough exec to let the experts be the experts, to put the processes and organization in place that will foster great teams and let these teams do their job. This strategy isn’t romantic. It doesn’t make for dramatic headlines. It’s not something that those of us outside a car company can see and comprehend. It’s just what Ford got with Mulally and what GM needs from its new CEO.

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75 Comments on “Editorial: Why GM Doesn’t Need A “Car Guy” CEO...”

  • avatar

    I agree. Leadership is crucial.
    Leaders need to have the vision, need to put the appropriate people in position, give them the tools to do the job and trust the decisions they make without second guessing them unless it’s absolutely necessary.
    …and then hold them to account for the losses and laud them for the wins.
    It’s really simple, but it’s very hard to do well.
    There seem to be a lot of people jumping ship right now, I hope GM can find the right people to lead.

  • avatar

    How about Apple, Google, Microsoft, Bose and many other CEOs who are “car guys” in their respective fields? Actually the most “industry transformative” companies that come to mind were often run by enthusiasts of the corresponding industries.

    • 0 avatar

      I believe their enthusiast leaders were also figureheads of a sort, and hired other folks to actually run the companies.

    • 0 avatar

      Surely they had a lot of technical (i.e. engineers, accountants, MBA, etc) people to run the company properly. Same as a captain of an ocean liner has a crew to run a ship.
      What always distinguished those enthusiast CEOs was the unique vision and understanding of an industry that they had. Good example is what happened to Apple in 90s when a “regular CEO” ran it. It was slowly changing back to yet another maker of personal computers. It went back to life only with the return of Steve Jobs together with the new OS (NeXTSTEP, which eventually became OS X at Apple) that he developed while away from Apple. During the same time off from Apple he helped start Pixar, which’s arguably a leader in computer animation now.

    • 0 avatar

      this just doesn’t seem right, the last thing GM needs is an uber bean counter.  No true car guy would have brought us some of the galactic stinkers that GM has created from time to time.

    • 0 avatar

      I think Microsoft and Apple are great examples of what happens to companies when “car guys” don’t run them.  First, neither Steve Jobs nor Bill Gates were the “car guys”, Paul Allen and Steve Wozniak were those people.   Steve and Bill’s success was recognizing those with supreme talent, a market with little or no competition, and putting it all together and generating a product.

  • avatar

    I agree with the overall message here, but I question how you can say that things like direct-injection, VVT, good seats, well-aligned interior trim, and some sort of suspension effort doesn’t have an obvious impact in getting from PointA to PointB.
    The average car buyer might not care to know all the ins-and-outs, but they aren’t going to want to buy some rough running, low power, low fuel economy, widely geared, creaks while turning, plastic interior nightmare that makes the Avenger SE seem good.

    • 0 avatar

      You just described the Avenger SE.

    • 0 avatar

      I hate to go all ape on your comment…

      But jsut look at the vast amount of vehicles out there.

      Ya got heavy porky cars.. masquerading as Midsized when they are truely LARGE.
      Ya got issues with the NY / LA times talking about how accidents are up because people are more concerned with talking on phones.. than driving the car.

      Ya got a ABUNDANCE of SUVS / CUVS on a road.. where the greatest majority 95% dont use them as designed.. or intended.

      In the end..
      Ya got hundreds of millions of people driving around in Cr-Vs complaining about how the 4cycl motor is wimpy and doesnt move the car. All the while the vehicle is pushing 36-3800lbs. Ya cant expect a vehicle of that size.. to be moved easily with a 4cycl. Not Honda’s 4cycl anyway, not since theyve decided to step away from further engine mangement and efficiency. Ya got Accord pushign 36-3800lbs still with a 4cycl and a Accord Tourer thats about 4000lbs thats only toting a 6cycl.

      There are hundreds of thousands of rough running (every chrysler), low power (every SUV power to weight ratio), low fuel economy (every SUV power to weight ratio), plastic engineering nightmare vehicles (GM vehicles).. on the road.

    • 0 avatar

      Only the people who frequent TTAC or AB or read C&D worry about the things you mention.
      The vast amount of vehicles are sedans, compact, midsize or large
      No CR-V owner complains about the power, otherwise why would they own a CR-V?
      How did Chryslers become rough running? What GM or Ford exec started that myth?
      Car people overstate what “rough running” is anyway, normal people are OK with anything that doesn’t buck and wheeze.
      Widely geared is a problem?
      Creaks while turning would be indicative of a fault and that repair is needed not some kind of engineering or design flaw.
      The Avenger SE no longer exists, SXT only and it’s a fine car.

    • 0 avatar

      I’m talking about it in terms of relative to the competition. SUVs do have bad fuel economy, but you don’t want to be building the most under-engineered wheezing gas hog of them all. Lots of cars go the plastic interior route, but your don’t want to have the most offensive one out there.
      My point was that a nice (not necessarily sporty) suspension, direct injection, VVT, and good build quality are hardly “car guy only” things.  Just because the average car buyer doesn’t know a lot about what goes into them doesn’t mean they won’t appreciate the improvements they provide.
      By “widely geared”, I meant old school 4-spd autos.  Specifically, I was thinking about the huge difference between anI4-powered G6 that had the 4-spd auto with one that had the 6-spd auto unit.  Fuel economy, engine noise, and acceleration were all better with the 6-spd.  I’ve noticed a similar improvement with the Forte when comparing the 5-spd auto and 4-spd.
      I know that the Avenger SE doesn’t exist anymore, but I brought it up because it was the biggest “the manufacturer gave no effort here” car I’ve ever driven.  It also creaked in turns.  The SXT 2.4L was okay, and  the Avenger R/T 3.5L I actually kind of enjoyed.

  • avatar

    It doesn’t take thousands of people to design a car. That has been proven time and time again. It takes a small dedicated team. The rest is merely sturm and drang.

    This is one of the many continuing mythological  issues that holds (especially) the D3 back.  Ford, Fiatsler, GovMotors… Give me the org chart and the job descriptions. Anybody who has been in any other company (yes, manufacturing) will show you how to cut 30% out, and get better results. The auto industry has more make-work-overhead-staff-gigs than any industry not located in the old USSR.

    Agreed it doesn’t need to be a hobbyist, but it needs to be someone who knows you don’t need  anymore than 3 levels of management between the plant and the prez.

    There are still people at GM whose entire job is to produce reports that no longer get read and haven’t been relevant for 30 years. Because that’s the way it’s always been done.

    • 0 avatar

      This is what everyone misses. You do not need a separate engineer for every part of the car.  Most parts of the car, that are not governed by the cars styling, are from the parts bin. You do not need an engineer that works 2 months on deciding what the proper placement of the passenger rear window switch goes.
      The 3 levels of management is also true.  What the hell do all these people do? Why does there have to be a field of people in charge of each brand when ultimately there is no difference anyway. In the ideal Chevy Cadillac world of GM, you wouldn’t need all this. It doesn’t take a genius to figure out that one has to be a competent fleet of cars capable of satisfying 90% of the populace, and the other premium world class RWD/AWD cars that can’t be beat in build quality and materials.
      The bean counters are another killer in these companies. They kill reputations for quality because the substitute cheaper materials in.  The claim that these savings add up, but do they add up to the point where GM has to discount its models at to move them? It also doesn’t take into account added warranty payments. How many of these “cheap parts” end up being constantly replaced. My father had a Grand Caravan which was on its third rack and pinion by the time e turned it in at 27K. It’s not a GM example, but do you think GM is that far off. Would spending a couple more dollars on a rack make it last longer then 12K each? Probably.

    • 0 avatar

      I doesnt take thousands of people to design a car?

      Apparently you havent read describing the build up of the 96 Taurus.

  • avatar

    Car guy Lutz subs for Henderson at L.A. auto show:

  • avatar

    OK, I can’t disagree.
    I guess what I’m thinking is that just being an enthusiast isn’t enough. The guys who started the companies mentioned above were enthusiasts for sure and they all had a great idea. I think that what Michael is saying (and I agree) is that the leader doesn’t have to be a car guy as long as he recognizes people who have a passion for their work and inspires them to work together, not against each other.

  • avatar

    Couldn’t agree more Michael but it won’t stop the comment sections of car blogs across the world being inundated with fanboi requests for a rear drive Toyota Corolla that drives like a BMW for less that $15K. Nor will it stop armchair CEOs from offering amateur critique of auto company leadership – even when only armed with little or no management experience of their own and a mere outside glimpse of the companies workings.

  • avatar
    Cammy Corrigan

    Could not disagree more. All that twaddle about “business administration” degrees and MBA’s is exactly that, twaddle. It’s that kind of thinking which got GM into this mess. Roger Smith, ring any bells? What people forget is that Alan Mulally is an engineers and thus thinks like one.  He’s still a “car guy” because he’s seeing things from the engineers side, which what the company needed. He forced Ford’s Euro products to come to North America, gave the engineers more freedom and, more importantly, he got Mark Fields to shut up. Mark Fields is a poster child of what damage a useless degree in economics can do to a company.
    A good case to illustrate this is the case of the hybrids. When they were first proposed, they didn’t make any sense. The fuel efficiecy was worse than a diesel, they were too expensive to make and couldn’t turn a profit as market prices. In short, they didn’t make any business sense. But because Fujio Cho (who, despite being a lawyer by trade, was instilled with the Toyota method), championed this method and forced it through. Had we had a CEO with a business administration degree, they would have canned it a long time ago, because “it wouldn’t have made sense”.
    Business administration degrees and MBA’s  should been consigned to the rubbish bin of life and just taught as facet of other diciplines.

    • 0 avatar

      He wasn’t saying that you need MBA’s to run the company.  Just that a good CEO is capable of leading, and doesn’t have to be Bob Lutz.  In fact, being Bob Lutz is probably bad.  You need a keen eye for good product, not just whatever gives you a boner.
      In are two types of customers for everything.  There are hardcore customers and casual customers.  The hardcore customers really, really care and finely sort and categorize products according to their aesthetic ideal.  The casual customer just wants something that works and simply doesn’t see or feel what the hardcore people like.  Or they don’t care enough to pay for it.  The hardcore customer despises the casual customer as the source of all that is bland and lame; the casual customer thinks the hardcore customer is an elitist ass.
      A good ceo has to sell product to both groups, cause that’s how you make money.  Having a hardcore CEO is bad, because he judges all the product not against what the products goal, but against his own aesthetic criteria.   And that is how you get 33,000 Pontiac El Camino’s and other useless items.

    • 0 avatar

      I don’t personally know how talented (or not) Mark Fields is. But I suspect that, if he wasn’t pulling his weight, Mulally would have shown him the door.

      As for MBAs and bean counters…the choice isn’t simply between a bean counter and a car guy or an MBA and a car guy. MBAs focus on the numbers, car guys focus on the product. Neither one focuses on THE PEOPLE.

      Great senior execs focus on the people and whatever they need to do their jobs well, and those people then manage the numbers and the product.

    • 0 avatar

      Didn’t know that MBAs and “car guys” are mutually exclusive.

    • 0 avatar

      Ford’s Euro products will be coming to America, we don’t know if anyone will buy them yet.

  • avatar

    Whitacre wants bigger market share:

  • avatar

    I have to disagree. GM has showed a steady decline for the last forty years or so. I would say that exactly anyone and everyone could step in and make a better job than Wagoner and the lot. I mean, what could possibly go wrong, that they haven’t already done many times again? I say, pig for president.  A pig wouldn’t at least have started the Vietnam war.

  • avatar

    This editorial is all wrong in the sense that TTAC and their B&B faithful –myself included– have been trying to run GM from the comforts of our keyboards. Everyone here is a Car Guy or Gal, are we not? Otherwise we wouldn’t be here. How many Death Watches have there been, each one pithy advice on what GM should/should not do. (I will remember to my death RF’s suggestion-from-Hell to kill the Corvette…)

    What makes Alan Mulally work for Ford was a combination of things: 1) he’s an engineer who knows how to put together a complex piece of machinery, so the technical folks can’t snow him; 2) he’s an outsider who has no vested loyalties to any of the factions within Ford; 3) he got his $25 million up front, so the parachute’s already packed and; 4) from all accounts he’s a nice guy who still managed to make all the Ford execs read from the same page. We don’t know if he yells at people or charms the hell out of them. Whatever works.

    GM should figure out how to clone the man.

    • 0 avatar

      GM and Detroit wasn’t about cars.  A car was the byproduct of making money.  Buyers wanted rolling living rooms and ever larger, heavier, gas hogs with primary emphasis on styling, trim and chrome.  Suspension, brakes, safety, emissions,  engineering bottom of the list and forced by Government.  Others did the process better and survived.  GM is stuck in the past and doesn’t have the time or money for any CEO to bail it out.

  • avatar

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    Yeah, it doesn’t have to be a car guy, but it does have to be someone who understands how the car business works and has some basic level of interest in cars.
    An example I’ve run into recently is marketers from breakfast cereal companies working at a computer game company.  The computer game industry, like cars and planes, is driven by product and customer satisfaction.  But breakfast cereals aren’t – those products don’t change much, so for them it’s a battle to win market share through marketing strategies and the occasional gimmick.  A cereal marketer may do alright in a different industry, but you couldn’t use his previous experience to predict future performance.
    Mulally came in from a fundamentally similar industry, and he actually drives cars and notices that he likes his Lexus.  You need at least THAT much interest in your industry to do well, enough to keep up to date on news in your industry and understand what it’s about.  And to understand what your customers go through.
    PS I’ve removed formatting with the button above, so this post can’t possibly go wrong.

  • avatar
    Martin B

    In the 1980s in South Africa, Toyota was still quite new but was hammering GM (then known as Delta because GM had disinvested), which had been in the South African market for many years. Both CEOs addressed our MBA class.
    The Toyota CEO was a South African who had come from a marketing background. He was very strong on customer values, obviously, but he was also fascinated by the problems of making a factory more efficient, and spoke a lot about their efforts to minimize worker movements by placing machinery in optimum locations etc, and about producing the precision machining quality that Toyota demanded. Straight from the Toyota Production System workbook.

    The Delta CEO, also a South African, was an engineer. When we asked him what the secret of success of running a car company was, he replied, “Oil on the shoes.” In other words, production experience. He was mainly concerned with government local content regulations. For instance, he gave the example of a dashboard — take a piece of sheet steel, add value by punching holes in it for instruments etc, but because the regulations were weight-based, you actually lose value according to the regulations.
    We shook our heads. The engineer couldn’t see the forest for the trees. He was too tied up in his own specialty field to see the whole picture from the point of view of creating a business that is responsive to the consumer’s needs and satisfies them in the most efficient way possible.

  • avatar

    GM needs a good dose of Prof Russell Ackoff. Sadly, he passed away about two years ago, but his thinking lives on. Highly recommended.

    • 0 avatar

      GM already got a dose of Russell Ackoff. My Ph.D. research inside GM was sponsored by Vince Barabba. Barabba studied Ackoff’s work and served on the board of his center at Penn:

      Theory alone doesn’t do the trick.

    • 0 avatar

      @ Michael Karesh
      I’m impressed. A fellow traveller then. I see successful Ackoff disciples running around inside Toyota, but not GM. What happened?

  • avatar
    Greg Locock

    Very good editorial, probably the most sensible one I’ve seen on TTAC.

    I particularly liked “Nevertheless, senior car company execs frequently step in and make such decisions. The media legitimizes this meddling, lauding gutsy top execs who make snap product decisions. ”

    I remember the last twit that overrrode the styling clinics, cos he wanted to push the boundaries.

  • avatar

    I remember quite a few years ago, passed around the emails, was a joke about GM talking about what would happen if Microsoft built cars.    The first part of the joke (sorry, TTAC, but it looks like others thought GM was in trouble long before you came along) was a story about Bill Gates saying something about GM should be more like Microsoft.  It probably wasn’t true, but it was a funny read (at the time).    Actually, do a search on “Microsoft built cars”.
    I nominate Bill Gates to be CEO of GM.

  • avatar

    20 page powerpoint, not even  close, try 150-250 pages.  Mulally said if you can’t present the required information in 10 pages, they you don’t have a good plan.  It would take a team of people to put together those hundreds of pages ppt, and then someone had to review them for formatting, proper fonts, etc etc etc.  huge waste of personnel.
    Then there’s the executive who things they know more then the engineer responsible for the part.  And how can we forget the executive vp’s insisting to change major factors, causing months or years product delays.
    I could write a whole book on the idiocy I’ve seen over the years.

  • avatar

    Car guy vs numbers guy vs customer guy …….      It’s all beside the point.
    The D3 are largely run by white guys.   Americans of European descent, mostly.    Occasionally white Europeans.   All the Detroit companies, and many European ones are in trouble.
    The successful companies are from Japan and Korea.   Obviously then, what is needed is Asian guys.     I’ll take an Asian lawyer over an American engineer any day.
    Now, before anyone gets too upset about race issues, let me say two things –
    First, I’m half joking.   It’s not the color of the skin or the shape of the eyes that’s important.
    Second, I’m only half joking.   Toyota, Honda, Nissan, and Hyundai all know what they are doing, and are all continuing to eat Detroit’s lunch.   These are the companies to benchmark.  These are the companies to emulate.
    Let me throw in a third thing – my wife is Asian.   I don’t believe Asians are smarter than other people.    I was being facetious to make a point.
    In case I wasn’t clear, my point is that we are getting lost with this engineer vs MBA stuff.   I don’t think it matters.     It’s about having a plan, and a system, and sticking to it, year after year.     It’s about getting better, not getting by.

    • 0 avatar

      Nissan almost died, was saved by Renault (and a non-asian CEO).  Mazda almost died, was saved by Ford (and a non-asian CEO).  Mitsu is as good as dead (about to be saved by the french as well).  Hyundai was saved by a huge conglomerate and a captive market and now enjoys certain exchange advantages.  The japanese have also benefitted from a captive market and certain exchange advantages (look at there products since that advantage has gone away in the last 5 years)

      I would wait awhile before crowning the asians king.  If you look at China, were there is a level playing field (the cars are built there taking away currency/cost advantages) american and european companies dominate.

    • 0 avatar

      Toyota, Honda and Hyundai are also well run enough to get Americans to design and build the cars they sell to Americans.
      I don’t believe Nissan counts, they’re always on a slippery slope because their reliability is often poor.

  • avatar

    Its kind of funny, because this article describes exactly how Chrysler was in the 1990s when Lutz was running the show; he set up a business model where the executives got out of the way of the people who really knew what they were doing.
    Which is why I am surprised that if Lutz managed to force past Iacocca and make those drastic changes at Chrysler, why he hasn’t done the same with Rick/Fritz and GM.

    • 0 avatar

      The reason Lutz could not effect a change at GM similar to what happened at Chrysler in the 90’s is because GM was so much bigger than Chrysler. Compared to GM, Chrysler was not only smaller but “lean and mean”. They simply did more with less. Chrysler in 90’s, especially early 90’s was more like an entrepenurial company than a 75 year old auto manufacturer. GM is glacial in comparison to effecting change.

      Bob Sheaves, who worked as an engineer for Chrysler, wrote an excellant article about what it was like to work at Chrysler in the 90’s and after Daimler came in and FUBAR’ed the place. I highly reccomend it.

      One of my favorite parts:

      “To truly understand the Chrysler preoccupation with personal responsibility, you need to look at a personal experience I had with Bob Lutz.

      There was a ride and drive review at Chelsea Proving Grounds in 1991 for various prototypes of the BR (T300) [This would become the Dodge Ram pickup, the one with the “big rig” styling that was a big hit in the market]. Bob Lutz did not like how the lower control arm mounts of the front suspension showed below the cab the design point for the suspension. He wanted them changed to something that “looked cleaner.” I said, “Under QIP [Quality Improvement Process – Chrylser’s version of kaizen] provisions, no, because the angle of those LCAs are what allowed me to give the truck such a smooth ride offroad.” Bob Lutz was caught. QIP said that the responsible engineer was the final arbiter and Lutz was the leading promotor of the QIP process. He let it go, and that suspension got numerous awards from the magazines and reviewers.

      Under [Daimler’s] “Quality Gates,” such a comment by me would have immediately resulted in my being escorted off the grounds by Corporate Security. Lutz followed his own rules, so did the Daimler people. The two sets of rules were totally incompatible. Something had to give.”

  • avatar

    I think Mullaly has proven that you don’t need a car guy. What you REALLY don’t need is a beancounter with not charisma and not interpersonal skills. A CEO is a leader, not a manager. A CEO should have somewhat of an adversarial relationship with the accountants. A CEO should inspire their people. The CTS, Lacrosse and Regal show that GM can build good cars. Find that leader CEO, GM and you might just make it after all.

  • avatar

    Car guy required?   No.
    The only required qualification is to have experience with a company that manufactures something.  The more complicated the product, the better.
    That’s why Mulally is well suited to the job.

    • 0 avatar

      Well suited for the job????
      All Mully did was implement what we have been saying for years.  Lower the work force, sell brands, bring production inline with buying habits, don’t rely on fleet sales, increase quality and desirability (Ford still needs work here though…).

    • 0 avatar

      I’d say that Ford’s quality improvements happened before Mullaly. The 2003 and up Ford models have all had good reliability and all were in development long before Mullaly. Maybe Bill Ford deserves some credit for Ford’s good standing.

    • 0 avatar


      Mulally didnt do any of the things you mentioned at all. The stuff from 03.. was right after the Exploder issues.. and getting over Jac the Knife. Heck. They still believed in P.A.G at the time.

      It was also heard and said.. that Bill Ford III was detrimental to operating the company.. because he was a Yes man. He couldnt say no to the SUVs that were running the company.

      As for Mulally… being involved in “good reliability” and how its was “in development before Mually..” makes no sense. Ya dont build reliability.

      The whole reason for Mulally was the Taurus. I wont get into THAT whole DEBACLE. (There are over a hundred blunders just associated with the recent version of the name, NTM the couple thousand associated with the name in total.)

      He was the one to bring the name of the car back.
      He was the one to bring the car back.
      He was the one to put together a plan called ONE FORD.
      He was the one to put Explorer on a unibody frame (Flex, Edge — All volvo sourced frames… which is why they all get “good safety and security ratings from C.R).
      He was the one to outline car model cycles.
      He did put the path to the new Focus and Fiesta in the U.S to fruition.
      He did close a few SUV factories.. to just make cars and or make the factory flexible, knowing that the frame that the Fiesta / Focus are on.. can make much more (C/S max for example.)
      He was the one to notice.. how many trillions the company spends.. just on marketing a new name. — because they screw up the old one so bad they have to market a new one.

      And if anything…
      The Fusion was the one to start Ford on their “path to righteousness”.

      Mulally didngt do anything great here.. , he just did the standard CEO thing… cut workers, factories.. everything to the bone.. all the while taking credit and a H E F T Y pay for that.. and moving on.

    • 0 avatar

      You “build reliability” or really build more reliable cars by installing new engineering and manufacturing processes to improve quality performance. It doesn’t happen overnight and Fords cars were already being rated as reliable before Mullaly started.
      Getting rid of the SUVs in 1999-2007 would have been a stupid decision. The Explorer problem was from the mid 90s.
      I’d still say yes to BOF SUVs, just in smaller numbers and only full size.
      Plus CUVs are SUVs and SUVs are CUVs for the most part. As long as they are high up in the air, roomy and comfortable they will sell.
      Again, we’re not sure the new Focus will sell any better than the old one.
      I don’t see any blunders with Taurus, for the most part it was a good car that always sold well. The Five Hundred was a good car but the name went too far back into Ford’s history for todays short attention span public to remember. The Five Hundred got trashed in the press by people who never drove the car.

  • avatar

    What GM and Chrysler need is a Cheif Executive who can lead them out of bankruptcy to solvency.  They need someone who will get the company profitable, and making the shareholders happy.  And Whitacre has said as much and said it simply, GM needs to make money and they need to do it soon. IMO, they need to find someone who was 1) not whelped in the GM entitlement culture 2) Not a car guy so he’ll make his decisions for sound business reasons.

    How many times have I read on TTAC that the Corvette ought to be cancelled? That would be a smart business move, but there isn’t a car guy that would do that.

    • 0 avatar

      That’s because canceling the Corvette would be stupid. What GM needs to do is license the Corvette name and image like Ferrari licenses theirs. Ferrari doesn’t make any money building and selling cars. They make it all selling T-shirts, coffee mugs, flags, toy cars, etc. They get license fees from every product with a prancing horse or the Ferrari name on it. GM needs to do the same with Corvette

  • avatar

    I may be an armchair CEO, and I may not have a multiple degree pedigree, but some things are so obvious as to be ludicrous. Yes, maybe I’m not an engineer or accountant, and I don’t have a vast wealth of experience in running a billion dollar multi-national automobile company, but as a teenager 37 years ago I recognized that GM was f’ed up.

    What angers people like the B & B is the hubris and arrogance of GM. There were decisions that needed to be implemented decades ago, but GM management couldn’t see the writing on the wall, or were in a complete state of denial.

    Admittedly I am certainly not capable of being CEO of General Motors, but I operate a small printing company, and when my customers tell me I’m doing something wrong I react, I don’t blame the customer. I provide the best product I possibly can at the most reasonable price point possible, and I give “warranty” (re-runs, corrections) service, almost always without question. Sometimes I do it to maintain a good customer relationship, even if I know my customer was the party at fault. I don’t advertise, except for word of mouth, and in this lousy economy, the business managed not only almost 7% growth over last year, we also managed to pay down our line of credit. Why? I hire quality people, pay them above industry standard wages, and give them autonomy to do their job. If a mistake gets made, it’s noted, and if an employee goes above and beyond, it’s lauded.

    General Motors needs a CEO that can attract and motivate the right people for the right jobs, clean out the deadwood and clean out the detritus of the old GM culture. Being an engineer won’t hurt, but more importantly a CEO has to provide clear direction and utilize the best parts of the organization. Most importantly, he has to have a clear picture of where he has to steer the ship and be able to articulate his vision to the troups.

    GM needs a clone of Alan Mullaly. I don’t see Ed Whiteacre as anything more than a caretaker.

    Mr. Karesh has hit the nail on the head in this editorial.

  • avatar

    I am sure everybody heard the saying “Do what you love and you’ll you will be successful”. Somehow this basic life lesson hasn’t been learnt by most decision makers in the American business. That’s why American economy produces less and less things people around the world want to buy. One of the few exceptions to this is the computer business. Not surprisingly this business was started by people with passion for computers. Although there is a less and less of those, it’s still enough to keep the business on top.  One day when all the top leaders in IT are lawyers, MBAs and accountants the IT business will go the way of the car business.

  • avatar

    I don’t understand.
    Do you or don’t you like the Mulally hire?
    “a Lexus-driving Boeing executive”…hell, I think someone who likes Lexus would be a plus, not a negative.

    And reading your editorial, it seems that you are telling us an executive has to set a standard, set a vision…and then make sure the entire company managers up and down implement it.
    I believe that is what he’s doing.   He’s making sure the field leaders run their platoons well.
    Make decisions and take action needed without bogging down.
    This is what he does.  He surrounds himself with thinkers and doers.
    How else could this have happened If he wasn’t this type…

    I mean, it’s the NON-Jimmy Carter man you want.

    I guess I missed the point, other than GM’s failure at getting any good management.

  • avatar

    Big assumption that Alan Mulally isn’t a “car guy”. He is an engineer by training.
    German automakers tend to have a Dr. Ing. type at the helm, a guy with an engineering background who has then had management training. GM has had the lawyers, accountants and anonymous suits with MBAs crash it right into the side of a mountain. At least with a car guy around you won’t end up with an abortion like the aztec or 9-7 on a lot.
    Was GM even a focused automaker or did it fit better into the mold of messy 70s conglomerate, with a bunch of barely related businesses and competing divisions and a HQ that didn’t know its ass from its elbow?

  • avatar

    What GM, Ford & Chrysler needed was leaders with a vision of what their respective products would be.  The companies were lead instead by men with no vision, no heart, no passion. They merely copied their competitor’s products and processes in vain attempts to remain “competitive”.  A Chevy Vega with an engine that had an aluminum block & an iron head resulted from a lack of leadership, vision and passion.  The development team wanted aluminum/aluminum. The executives opted for cost controls. Ford might have better competed with GM by making a Ford to compete with a Chevy, one to compete with Pontiac, one to battle Olds, etc, etc. But the Ford executives wanted to copy GM and have a brand in each price class.  No vision, no passion, no glory.

  • avatar

    GM needs a CEO who will clean house down thru middle management and then articulate the vision and let the people responsible for fulfilling it do their jobs. I’m not a CEO but I did spend thirty years in the retail automotive business and it’s common knowledge a huge part of GM’s problems are its ingrown culture. Until that ingrown culture is removed GM won’t be able to do the things they need to do to be successful. From what I can see in removing Henderson and LaNeve that is exactly the track Whitacre is on. New non-GM top management with the same on the way for middle management, at least I hope so.

  • avatar

    This is a good editorial, and I think it’s going to be very hard for a lot of TTAC’ers, especially those with an engineering bent, to realize that a good President or CEO is a leader first foremost and that their professional bent is irrelevant to the ability to be a good leader. ** Granted, its similarly hard for accountants and marketers and MBAs to do the same, but he majority of armchair quarterbacking is from the engineering camp.
    People put far too much faith in profession, especially professionals.  GM’s leadership was never sufficiently accountable for it’s mistakes (Wagoner was spectacular in this respect, but not alone) and that wouldn’t have changed under an engineer or car guy.  When your leadership doesn’t lead, or fosters cronyism in lieu of leadership, you’re going to have problems: no vision, no motivation, no accountability. Profession just determines some of the minor details of the inevitable flame-out, but the eventual crash-and-burn is going to happen no matter what.
    People will cite Steve Jobs or similar as an example of an executive whose involved in products, and it’s true that he is (it’s also true that it’s a completely different company and market) but it’s also true that Jobs holds himself ultimately accountable for the products his company produces (and thusly leads his “troops” to design and build those products, because they in turn are accountable) and that’s what’s really important.
    ** If you’re a CEO of a company like GM and you need to bring your engineering, accounting or marketing skills to bear with any frequency, you’re probably micromanaging.

  • avatar

    Could not disagree more. All that twaddle about “business administration” degrees and MBA’s is exactly that, twaddle. It’s that kind of thinking which got GM into this mess. Roger Smith, ring any bells?
    Roger Smith’s problem wasn’t that he thought like an MBA, it’s that he just wasn’t very good at leading people.  His ventures into improving GM (the GM10, automation) were the kind of mistakes an engineer would make; the Jack Smith/Ron Zarella would be a better example.
    What people forget is that Alan Mulally is an engineers and thus thinks like one.  He’s still a “car guy” because he’s seeing things from the engineers side, which what the company needed.
    Mullaly works for Ford for two reasons: a) he wasn’t encumbered by the “if it’s not the way we’ve been doing it, it’s wrong” attitude that was stifling Ford (an GM, and Daimler, and…), b) he made Ford’s upper- and middle-management accountable in ways that they were not in the past.  None of this requires an engineer’s training or skills.
    A good case to illustrate this is the case of the hybrids. When they were first proposed, they didn’t make any sense. The fuel efficiecy was worse than a diesel, they were too expensive to make and couldn’t turn a profit as market prices. In short, they didn’t make any business sense. But because Fujio Cho (who, despite being a lawyer by trade, was instilled with the Toyota method), championed this method and forced it through. Had we had a CEO with a business administration degree, they would have canned it a long time ago, because “it wouldn’t have made sense”.
    You’re contradicting yourself.  Watanabe and Cho are not engineers and invested in a technology that, from both an engineering and accounting standpoint were bad ideas.  They did this because both they’re very good strategists and saw complex hybrid-electric drivetrains as a gambit, but one that stood a reasonable chance of paying off both in terms of dollars and market leadership.  Again, not something they teach either engineers or accounts, but something the do teach in business schools.
    Meanwhile, the companies that were headed by engineers (BMW, Honda, Daimler, VW) deliberately chose solutions that were sound in engineering terms but ended up, strategically, to be less than optimal.  They’re now looking at patsies, playing catch-up to the market leader despite their engineering prowess.

    Business administration degrees and MBA’s  should been consigned to the rubbish bin of life and just taught as facet of other diciplines.
    That’s pretty much how they work.  Most MBAs hold a degree in something else.
    You’re falling victim to a logical fallacy: you see that failed companies are led by MBAs and are assuming that all MBAs lead failed companies.  What you’re missing out is that the reason they’re failing is because those “bad MBAs” would be bad leaders even if they didn’t have MBAs, and that there are a large number of MBAs who are involved and running very successful companies.

  • avatar

    I agree with much that has been said but would add the following:
    1.  The most important thing for GM to do is to hire a competent CEO with leadership experience in the industrial sector.  The car business would be best but as Alan Mulally has shown, a competent leader with ‘other than automobile manufacturing’ experience can get the job done.  It comes down to corporate culture as pointed out above.  While leadership principles are the same all over, there are thousands of intricacies within each type of business.  Industrial executives don’t necessarily make good hospital CEOs and vice versa.
    2.  GM’s problems (as well as Ford and Chrysler) were predominantly created by their past leadership.  The middle management, bean counters and unions did not cause GM’s failure.  GM’s Chairman, CEO and Board of Directors decided many years ago that short term profits (quarter for quarter) were more important than enhancement of value.  The average customer may not know the difference between VVT and OHV but the sum total of value in better products is obvious.  That is a large part of why Toyota and Honda have been so successful.  For so long, they have simply offered a better product for the money.  Hyundai is not far behind.  GM, Ford and Chrysler did not respect their customers and chose quicker profits in trucks while losing market share year after year.  That lead to failure.
    New leaders must recognize that sustained profitability is dependent upon top notch products and service.  That means allowing the designers, engineers, product planners, etc. to do their jobs as Mr. Karesh pointed out.  The exact make up of that structure can be debated ad infinitum.  Business leaders  with a passion for those products as well as experience in manufacturing have the best chance for success.
    Profits are necessary for all businesses to survive but businesses in which profit is the only motive are doomed to fail.

  • avatar

    In my humble opinion, GM has to give up all the corporate crap – and focus very simply on doing their very best to design as good of a handful of autos as they possibly can – not alot (they have proven they cannot) but just a few, and cut out whatever fat that is not focused towards that end.

    You can have the most brilliant of CEOs, but if you are consistantly year after year marketing a product that is decidedly inferior to its competitors, you will ultimately fail, as GM should have been allowed to do many moons ago.

  • avatar

    My recollection from my MBA studies years ago is that the automobile industry is cyclical and capital intensive.  General Motors business model was extremely successful for many years with their employment of many engineers and MBAs, many of which were “car nuts.”  Successful business models will eventually have to change because of changing economic events and competition.  Those auto companies that are so revered in this forum, being mainly German or Japanese, had the support of their governments to export their product to the USA.  Some business models are not sustainable without similar support.   Now that GM failed and has government support it remains to be seen if they can become competitive again.
    No doubt GM, Chrysler and Ford are all going to be case studies at Harvard, Stanford, Wharton, etc.   You should send your comments to those business schools as they seek the solutions for the next generation of CEO’s.

  • avatar
    Richard Chen

    Agreed, Michael. There was once a guy who knew absolutely nothing about cars, tasked to take over a failing car manufacturer that everyone thought was toast.
    Things are not so bad at Fiat these days thanks to Sergio Marchionne.

  • avatar

    I mostly agree, but I disagree on two parts:
    1. The assumption that a “car-guy” would make only cars that they would want.  That is just silly.  That assumes “car-guy” and incompetent.  I do see that you are trying to say they need to be more than simply a “car-guy”
    2. I would say that Mullaly is kind of a “car-guy”.  First, he is really passionate.  If he carrys over a small amount of the passion he had for planes to Ford, he would be very inspiring.  Two, he is experience in an industry similar to automobiles, because I think when many people say GM needs a “car-guy”, they mean somebody that knows how to build large complicated machines and not some CEO from a bank or something.
    I do believe I agree fully with your larger point that a CEO is not there to design amazing cars, but to design a company, an organisation that itself designs amazing cars.  I really think that management is mis-understood by most people and that good management is really under-appreciated.  I think this is partly because really good management is almost invisible, it just makes it look like everything just sort of happens.  For example, if engineers are getting the resources that they need to meet good requirements, they just think that this is what is supposed to happen.  It is when engineers are seeing a lack of resources or terrible requirements, that is when they start complaing about mangement.  The CEO should not be picking the font for the tachometer, but should make sure that people and importantly the processes are in place so that they do not need to be involved in it.
    As an aside, I do not think that this an attack on calls for an engineer to be put in charge, so I do not know why some commentators think that.  I do think some engineers do under appreciate the skill it takes to be a good manager.  Making a great car is not about having the best engineers, but using those engineers and the rest of the needed groups the best.  You see this in collegiate engineering design competitions (like Formula SAE), it is less of engineering design and more of an engineering management competition.

  • avatar
    Glenn Mercer

    Lots of good comments here, so just a few more (probably redundant) ones:
    1. GM probably needs a car-business guy more than a car guy, if you catch my drift.  In my experience car guys tend to like exciting cars, and overlook the mundane dull ones that ring the cash register.  Note how many car guys on this board and so many others have castigated Toyota for dull styling over the years, when maybe dull styling is what a lot of customers want?
    2. GM was indeed and maybe still is arrogant and insular for decades.  But it might have been rational to be that way (that is, I don’t know too many executives who get up in the morning saying “How can I be more arrogant and detached from consumer wants today?”).  As in, when one’s market share is near 50% it is more rational to spend the incremental development dollar to retain an aging Buick buyer than to figure out how to  conquest a person currently in a Honda.  I don’t think the Japanese market share gain in the USA was necessarily due to incredible superiority of the Japanese managers: it was more due to the fact that when you are playing offense you HAVE to build what will win new customers (cuz ya aint’ got no old ones!): when you are playing defense you can ignore (for far too long) your rivals, as you just focus on keeping your loyal fans.
    Trouble is, when the loyal fans eventually all age and retire to Florida to drive golf carts, you don’t have many young loyalists left in the pipeline…. (to mangle a metaphor).  At this point one has to drop the arrogance (“We know what is best for the people who are pre-disposed to buy our stuff anyway”) and become humble (“Please tell us, owners of Hondas, what we need to do to win you back!”).

  • avatar
    Bruce from DC

    Well, definitions are everything, but if you mean “car guy” as someone who cares about product, the I disagree.
    Having had my brain corrupted by law school rather than by business school, I would say that the first question the CEO has to ask him/herself is “What business is my company in?”  Fortunately (unlike the case of so many conglomerates like GE), the answer is simple: “my company is in the business of making and selling cars (and trucks).”  Not, “my company is in the business of ‘ehancing shareholder value’ etc.”  If you are in a business, you have to assume that if you do that business well, you will prosper and everything else will fall into place.  If you don’t have that assumption, you should not be in that business.  You’re just wasting your time.
    So, a CEO who understands that his/her company is in the business of making cars should be focused on the product — cars.  And before any of his/her company’s products rolls out the door to be offered for sale, that CEO should take a look at that product and ask him/herself: Why would someone buy that product, as opposed some other, similar product made by one of my competitors?  If he/she doesn’t have a good answer to that question, then the car should go back to the drawing board.
    That’s what I would mean by a “car guy.”
    I see the point about other “car guy” products not being successful because “car guys” want something different than the public, and I agree.  If “car guy” means “enthusiast” that’s not what’s needed for CEO.  A car I once owned is a good example of a car guy product that failed: the original Taurus SHO.  Enthusiasts loved the car (I loved the car), but not enough enthusiasts were out there to buy it.  So, it was pretty heavily discounted — my 1992 was, because I know what I paid for it.  And the 1996 model straddled the fence and pleased no one.  It offered less performance than the ’92 version; even fewer people bought it.
    So, let’s have a CEO that cares about product . . . because GM and every other car company is producing a product.  No Aztec’s, please.

  • avatar

    Another large problem at GM is the same as at other large companies: A managers worth is measured by how many people report to him/her.  This leads managers to hire as many people as they can whether there is need or not.  This leads to the bloat and many layers of management others have referred to here.  A good example is Microsoft.  In their gory days when they made tons 0f money and controlled their market, they only had 3 layers of management from a programmer to Bill Gates.  Now they have many layers of management, a complicated approval process, and have not had a hit product in years.  If not for corporate license renewal fees for older products, they would not be making money.  If they do not realign their management structure, they could be another GM in twenty years.

  • avatar

    More to the point, GM should not have a toothpaste salesman (Ron Zarella) as CEO. Mullally was actually a good choice for Ford because a Lexus driving airplane builder understands how to make very complex products with long development cycles and complex regulations (airplanes) and knows what a top selling car feels like. If Mullaly was driving a Lexus, then he is likely to expect similar levels of refinement and quality in Fords and will drive product in that direction. No bad thing as long as Richard Parry-Jones is still allowed to preserve Ford’s handling qualities

  • avatar

    No matter who ends up running G.M. or where they come from, G.M. has to have a Great Design Team and be able to build SMALL VEHICLES that are dependable and extremely fuel efficient. Both G.M. and Chrysler do not make good small cars!!! Over the years I’ve recieved at least one recall notice on every G.M. vehicle I’ve purchased!!!  G.M. and Chrysler as of the present cannot compare with a Toyota or Honda. I know people that have 2 to 3 hundred thousand miles on their Toyota or Honda with no major problem other than maintenance-Oil, trans fluid, clutch, brakes,tires, timing belts. G.M. had better figure it out! Most people don’t replace their vehicle at or before one hundred thousand miles these days and it seems that is what G.M. depends on and if you do keep it longer you’ll pay for it , dearly!!

    • 0 avatar

      More people have 2-300K miles on their Chevy, GMC and Dodge (and Ford) vehicles than all other brands combined.
      Not getting recall notices isn’t a good thing, it means the company is hiding something.

    • 0 avatar

      DAVEY49 if you’re counting Model “T”‘s on forward you might have something  there and you can “FOOL” yourself all you want in your own mind but sales are the best indicator of happy satisfied customers along with J.D. Power awards and resale value! I could go on do I need too?

    • 0 avatar

      Your ignoring some of the best selling vehicles on the road. Think F-series, E-series, Silverado, C-K series, Ram, Dodge Vans, Suburban, Expedition, Tahoe.
      They can probably design all the great fuel efficient small cars you ever wanted. GM sells a bunch of them over in Europe. Not enough people will buy them to make it worth it. I think that if the Chevy Cobalt was the best small car on the market sales might go up a few percentage points but they would still be behind Civic and Corolla. Maybe after 10-15-20 years of having the “best” car and/or Honda/Toyota making junk for 10 years GM might have a chance.
      OTOH, selling 1% more trucks would probably make GM more money than being #1 in compact car sales.

    • 0 avatar

      Davey49 , like I wrote in my initial comments, G.M. needs to make SMALL FUEL EFFIECIENT VEHICLES THAT LAST ! You sighted all S.U.V.’S and trucks and that is exactly my point. G.M. has used high labor costs for decades to excuse themselves from building small vehicles. I say hogwash! G.M. can assemble these vehicles starting in Canada, Mexico, Korea, China, South America, Russia, Austrailia to alleviate labor costs so the “We Can’t Make Any Money” doesn’t fly. We need those jobs here but that wont happen until America’s wage structure is destroyed and we’re on par with third world nations. If you don’t think this is going to happen just watch! This will not end with labor, it will affect most everyone.  

    • 0 avatar

      Davey49 , like I wrote in my initial comments, G.M. needs to make SMALL FUEL EFFIECIENT VEHICLES THAT LAST ! You sighted all S.U.V.’S and trucks and that is exactly my point.  The reason used is high labor costs  to excuse themselves from pushing small vehicles. G.M. can assemble these vehicles starting in Canada, Mexico, Korea, China, South America, Russia, Austrailia to alleviate labor costs so the “We Can’t Make Any Money” doesn’t fly. We need those jobs here but that wont happen until America’s wage structure is destroyed and we’re on par with third world nations. If you don’t think this is going to happen just watch! This will not end with labor, it will affect most everyone.  

    • 0 avatar

      Davey49 , like I wrote in my initial comments, G.M. needs to make SMALL FUEL EFFIECIENT VEHICLES THAT LAST ! You sighted all S.U.V.’S and trucks and that is exactly my point.  The reason used is high labor costs  to excuse themselves from pushing small vehicles. G.M. can assemble these vehicles starting in Canada, Mexico, Korea, China, South America, Russia, Austrailia to alleviate labor costs so the “We Can’t Make Any Money” doesn’t fly. We need those jobs here but that wont happen until America’s wage structure is destroyed and we’re on par with third world nations. If you don’t think this is going to happen just watch! This will not end with labor, it will affect most everyone.  

  • avatar

    Mullally went with a Lexus instead of a Cadillac or Lincoln. I say he is more of a car guy than the average American.

  • avatar

    The American auto industry is a mature business. Like most large mature companies, they’re run by suits. The inspiration and drive came from the first, and occasionally, the second generation of leadership. Those were the guys (yes, they were all guys) who had vision and purpose. The companies they created often bore their name, or at least their family’s name. Eventually they die off replaced by the next generation of management which may have lingering commitment to the values of the founders. They in turn are replaced by the corporate MBAs who major   in financial management and could just as easily be selling tampons as trucks. Maybe both, depending on the corporation. Their  only commitment is to the fabled “bottom  line” which generally translates as “the most for me, and screw everybody else”.
    In America today the corporate  managers have managed to rob the wealth of the society, invest in the cheapest labor they can find, and maximize their own personal wealth. GM’s decline started decades ago. It just doesn’t have decades to rebuild itself. As much as I love the idea of American cars, I really don’t like too much of their actual product. It’s pretty hard to be inspired by spreadsheets. That’s why Apple turned around after the return of Steve Jobs. Maybe Willie Durant should come back from the grave and take over GM. It couldn’t be worse.

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