Three Questions GM Should Answer
There is more chaff ejected from GM’s media department than from an airplane under missile attack. Sifting through the chaff, one finds a message that is the same as it was for decades: Things will be great real soon now, promise. Leave it to Fortune to present three questions GM should ask and answer (don’t hold your breath) :
Question 1: “ What is our corporate competitive advantage?” Fortune: GM is a huge company, but both Ford and Volkswagen make better use of their enormous scale with platform efficiencies. GM builds well-made vehicles, but its reputation for quality and reliability can’t touch Toyota’s or Honda’s. Nor, when customers go looking for the leader in safety, technology, or fuel economy, do they make a GM dealer their first stop.
TTAC adds: I like to listen to questions asked by journalists. They show what’s on their minds. These days, they more and more ask how a car company compares to Volkswagen. Nobody ever asks to benchmark GM. Both Volkswagen and Toyota treat GM as if it does not exist. Volkswagen wants to beat Toyota. Toyota rarely if ever mentions a competitor in public. In private, they mention Volkswagen a lot, and Hyundai on occasion. GM? Never.
Question 2: “Where are we the world’s best?” Fortune: Probably only in niche categories like large crossovers (Chevy Traverse, GMC Acadia, Buick Enclave) and full-size SUVs (Chevy Suburban, GMC Yukon, Cadillac Escalade). Cadillac is a rising star in the luxury passenger car segment but still can’t touch the Germans, and Ford remains the pickup truck leader until proven otherwise. Everywhere else, GM is an also-ran.
TTAC adds: I think Fortune is too kind.
Question 3: “Who are we going to pick to succeed chairman and CEO Dan Akerson?” Fortune: Akerson, 64, has signaled that he plans to leave within three years, but GM’s bankruptcy and downsizing wiped out a whole generation of executives who might logically have followed him. As a result, the leading inside contenders are relative youngsters: vice-chairman Steve Girsky, 51, product development chief Mary Barra, also 51, North American boss Mark Reuss, 49, and CFO Dan Ammann, 41.
TTAC adds: Picture any of them next to Ferdinand Piech, and Akio Toyoda.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Question 3 is unfair, since it assumes that the successor must come from inside. If indeed the bankruptcy "wiped out a whole generation of executives", that was a good thing. These were people who clearly were part of old GM's problem, not new GM's solution. GM has the option to pick a true outsider to succeed Akerson, as Ford did when they hired Mulally. Whiteacre and Akerson weren't outsiders, just retired executives who were already GM Board members and had a lust to run the whole show - and without either the vision or the drive to effect the cultural and structural changes that were needed. GM, like Kodak, has been a completely insular organization, with a culture that accepts failure and doesn't sufficiently value innovation. My fear is that new GM is too much like old GM, and presuming that Akerson's successor has to come from within GM will not cure this disease.
Overhanging the entire car market in the USA and arguably, China, is free money. That is setting up the next disaster, not just for GM, but for all the automakers. "Taking care of business" is exactly what GM needs to be doing right now, and largely is. The angry white men who invented "Government Motors" are dying off rapidly and will soon no longer be a factor in the market. At the same time, Cavaliers and their ilk are being crushed out of the collective memories of future car buyers. (GM trucks always were competitive.) Product lines are being vastly improved, while their Japanese competition remains stagnant. I don't think that the outlook for GM is as bleak as many think.