General Motors Death Watch 191: On the Fritz

Robert Farago
by Robert Farago
general motors death watch 191 on the fritz

Journalism professors counsel aspiring scribes to avoid deploying numbers in the first paragraph. It’s a sensible prohibition. Although statistics (a.k.a. facts) give journos the imprimatur of authority, nothing’s more narcoleptic than naked numerology. Which is just as well. My math skills are only slightly better than my ability to pilot a Gulfstream IV. But I know a man who regularly rides in the back of one of these airborne ego-carriers, and he’s an accountant. And the CEO of GM. For the weekend, anyway. The question is, who’s next?

Now that GM CEO Rick Wagoner’s mob have reported a $15.5b second financial quarter loss without offering a concrete, coherent plan to recover the company’s lost market share or staunch the arterial spray of red ink, Wagoner’s time’s up. COO Fritz Henderson is generally tipped for the top slot. While the financial community likes Fritz, handing Wagoner’s hand-picked successor the keys to the not-so-magic kingdom would be yet another monumental mistake.

Henderson is, nearasdammit, a Rick Wagoner clone. Though Henderson’s five years younger at 50, both men are accountants. Both men have Harvard MBA’s. Both men occupied GM’s Beancounter-in-Chief (CFO) position (i.e. managed GM’s inexorable decline). Both men can read a spreadsheet like walking a dog, but can’t spot a dog [product] if it pissed on their highly polished brogues.

Bottom line: Wagoner and Henderson define the world through numbers. While Global Product Veep Bob Lutz’ epic fail indicates that GM needs a red-blooded “car guy” at the helm like they need another Lambda-platformed crossover, now is the time for big ideas, not big numbers. (God knows there are plenty of THOSE hitting the fan.)

One of the big ideas that GM needs, as it goes into and through bankruptcy, is change. If Rick Wagoner’s tenure has taught us anything, it’s that GM’s business model is completely busted. The artist once known as the world’s largest automaker simply can’t continue designing, building and selling vehicles as they have for the last 100 years. Bureaucratic fiefdoms, union intransigence, crushing overheads, lackluster products, over-generous executive compensation, scattershot marketing, superfluous brands and more— EVERYTHING must go.

The salient fact here: Fritz Henderson’s worked for GM since Michael Jackson burned his scalp for Pepsi (1984). He is, in effect, a GM lifer. In terms of the old debate about whether radical reform is best accomplished from within or without, give me a break. The chances that an executive born of GM’s corporate culture will completely destroy that culture are about as great as the chances that Zimbabwe’s Robert Mugabe will suddenly champion genuine democracy.

Like Ford CEO Alan Mulally, The General’s next general should be ready, willing and able to abandon vast swathes of territory. In fact, GM’s leader must accept the fact that The General’s global dominance is dead, and it ain’t coming back for the next ten years (at least). By word and deed, he or she must communicate to the remaining employees that any aspirations in that direction are a dangerous fiction.

The new (yes new) goal: a return to profitability, whatever it takes. If GM must reduce itself to two brands, if GM must constrict until it can make its nut on a 10 percent market share, so be it. A piercing glimpse into the obvious, perhaps, but the wider point is that GM must experience a cultural revolution.

As always, real revolution starts with chaos. To liberate the talent locked-up within GM, the new CEO must fire ALL the suits nurtured by GM’s existing entropic structure. If Bob Lutz and Fritz Henderson are reluctant to unfurl their golden parachutes, the new CEO must push them out of RenCen's executive suite with extreme prejudice. As Machiavelli counseled, the cuts must be deep and profound, leaving not a single member of the old guard to undermine reform.

Many of TTAC’s Best and Brightest have suggested that GM should move its corporate HQ from Detroit to the left coast. This is exactly the kind of take-no-prisoners thinking GM’s new boss must bring to the job. Wagoner and Henderson are oblivious to symbolism’s importance to GM’s future, and the need to communicate forcefully and effectively to all of GM’s stakeholders. Unlike Ford’s Mulally or Chrysler’s Nardelli, GM’s new broom must be a great communicator.

Ultimately, GM’s slide into disaster is a story of personal failure, of board members and CEOs who couldn’t tell their ass from a hole in the ground. If the American automaker emerges from C11, it will be a story of the personal triumph of its new CEO. GM’s survival is not a question of numbers on a screen. It’s a question of leadership. Fritz Henderson is no more the man of the hour than Rick Wagoner. So, who is?

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2 of 49 comments
  • Potemkin Potemkin on Aug 05, 2008

    Anyone who thinks that getting rid of Wagoner and the top execs will change GM hasn't worked for them. GM is a failed organization from the top of the Ren Centre to the shop floor. Wagoner and his ilk have had 30 years to place like minded bullshit artists throughout the corp. These no talents owe their jobs to their no talents bosses who owe their bosses and so on all the way up the ladder. These peole are so entrenched in their fiefdoms that any turn around CEO will find backstabbers at every turn. Nothing short of a purge at all levels will change the culture. Sometimes you have to tear it all down and start over.

  • Redbarchetta Redbarchetta on Aug 05, 2008
    Potemkin YES YES YES YES YES YOU ARE SO RIGHT. I have been trying to tell people that simple fact for years now and keep getting branded as unamerican, and insensitive and crap. If GM can fundamentally never be fixed why should we keep propping it up? Have we finally crossed that line and become a communist society and I didn't know it. Some times you have to just throw away the old and start fresh and brand new, no matter how painful it may seem, it's fo the best in the long run. Especially sinc this organization is irrepribly damaged. Why don't we spend the money we would be wasting on a bailout for the clown that is GM and set it aside as start up capital for true visionaries to make a great american auto business from the ashes of what is left. I would gladly let go of my tax dollars for that, there is a much better chance of long term success than continuing down the same path. Of course the entrenched powers that be would fight this to the death to keep their old and useless ways.
  • Tassos Government cheese for millionaires, while idiot Joe biden adds trillions to the debt.What a country (IT ONCE WAS!)
  • Tassos screw the fat cat incompetents. Let them rot. No deal.
  • MaintenanceCosts I think if there's one thing we can be sure of given Toyota's recent decisions it's that the strongest version of the next Camry will be a hybrid. Sadly, the buttery V6 is toast.A Camry with the Highlander/Sienna PSD powertrain would be basically competitive in the sedan market, with the slow death of V6 and big-turbo options. But for whatever reason it seems like that powertrain is capacity challenged. Not sure why, as there's nothing exotic in it.A Camry with the Hybrid Max powertrain would be bonkers, easily the fastest thing in segment. It would likewise be easy to build; again, there's nothing exotic in the Hybrid Max powertrain. (And Hybrid Max products don't seem to be all that constrained, so far.)
  • Analoggrotto The readers of TTAC deserve better than a bunch of Kia shills posing as journalists.
  • Lou_BC How do they work covered in snow, ice, mud, dust and water? Vibration?