Agile or Adrift?

Eager to Show the World That bankruptcy had not dulled its ability to fast-track a good product, General Motors Co. Vice Chairman Tom Stephens announced plans at an industry conference for a new Buick plug-in hybrid cross/utility vehicle.

Less than two weeks later, GM pulled the plug on the program, raising concerns that a whirlwind 39-day tour through bankruptcy court had left management unable to make sound decisions.

To the contrary, GM spin-meisters say the episode demonstrates the new management structure's ability to reverse course at a moment's notice.

After the program was announced, GM hosted a 2-day product preview for consumers and others, and feedback for the 5-passenger CUV was not good.

Decision-making for the old GM often was compared to a battleship too big to quickly change direction.

In a post on GM's “FastLane” Internet blog, Stephens called the decision “a good example of the essence of the new General Motors… acting quickly, and boldly, and listening to feedback from customers, employees, dealers, media and just about anyone else with an opinion.

“What gives me pause is how quickly we made a decision and carried it out,” he adds. “In the past this would have been a several-month process involving meeting after meeting of the APB, ASB, and various other acronyms, and also many ‘offline' follow-up discussions before a decision was reached and enacted. This happened in one day.”

But at the same time, the management team could be perceived as moving too quickly. For a company trying to remake itself with “green” technology, bobbling a key hybrid program will not sit well with ecologically minded consumers.

The Buick CUV was supposed to get a next-generation hybrid system originally bound for the Saturn Vue before GM decided to sell the division. GM promises the technology for another product and expects no delay in its 2010 rollout.

Just a few weeks earlier, Vice Chairman Bob Lutz backpedaled on a suggestion the Pontiac G8, a well-received rear-wheel-drive sport sedan headed down the tubes with its division, would become the next Chevrolet Caprice.

Fans of RWD performance cheered, but Lutz revealed four days later a business case for the switch could not be made.

“It does seem a little schizophrenic,” says Erich Merkle, an analyst with Autoconomy consultants in Grand Rapids, MI. “But their house is probably a little messy after bankruptcy, and they've got some things to clean up. I can see how this could be a difficult time for them.”

Post-bankruptcy, GM has resized its upper management, leaving a core group of executives to hammer out decisions more quickly and with greater accountability further down the leadership chain.

Dave Cole, chairman of the Center for Automotive Research, says the new executive committee at GM recalls the days before former Chairman and CEO Jack Smith took over in 1992, when a single, relatively small group of executives managed GM's far-flung operations.

“Jack Smith eliminated the (single) executive board to bring (GM's) global operations together,” Cole recalls. It eventually united GM's regional design, engineering, purchasing and manufacturing operations into one global unit.

On the product side, the success of Smith's undertaking is evident in more recent vehicles such as the '08 Chevrolet Malibu, spawned from a global platform designed and engineered between GM North America and its Adam Opel GmbH unit in Germany.

The '10 Chevy Camaro comes from another global platform developed with GM Holden Ltd. in Australia.

Expect future Buick products to follow a similar road, combining design and engineering resources from GMNA and the auto maker's China operation.

After exiting bankruptcy, President and CEO Fritz Henderson announced the formation of an executive committee to oversee the auto maker's global operations.

The move ended the company's regional operating structure and jettisoned some lifelong GM executives from the highest ranks.

In late July, the shakeup continued with a second raft of retirements and appointments at the vice presidential level, basically completing GM's pledge to reduce its executive headcount 35%.

By ditching Smith's Automotive Strategy Board and Automotive Product Board, the new executive committee shrinks the number of executives overseeing GM's operations to nine from 22.

And whereas those boards met monthly, the new executive unit convenes weekly, from 8 a.m. to noon and never runs over its 4-hour timetable, committee members tell Ward's. Topic briefings are kept to one page and the board moves from item to item on a rigid schedule.

If a decision cannot be arrived at satisfactorily, the committee can punt the topic to the following week. Members now comprising GM's executive committee, in addition to Henderson include:

Reilly likely will add a board comprised of leaders from GM's various regions, and supervise it from Shanghai.

Announcing the restructuring, Henderson said the new board will “move decisions closer to the customer,” which alongside a product-first focus serves as the two drivers of the new GM.

From his days at the former Chrysler Corp., Lutz recalls the importance of agile, decisive management.

“We discovered the right way to run a car company was not with committees and structures and huge staffs that generate telephone books of numbers.

“The right way to run a car company,” he tells Ward's, “is to get five or six or seven people at the top who know how to run the business, who are each gifted in a different area, under a strong leader, and then you just talk about the business and make a decision. It's way more fun that way, too.”

GM's Reilly, speaking with Ward's after exiting an executive committee meeting, says the effects of the new management structure are being felt inside GM, too.

“People are feeling the change already, with the quicker decision making, and they don't know quite how to cope with it,” he says with a slight grin.

“They've been saying for years, ‘This is what we need.' Now they're getting it, and they're not quite sure about it.”

Decisions also are coming faster because the new management structure loosens GM's rigid matrix.

For example, the managing director of a particular country no longer must mull decisions with cross-functional groups such as manufacturing, finance and purchasing. He remains obliged to consult horizontally, but in the end it is his decision.

“There was a lot of churn in the organization,” recalls Reilly, a longtime international executive at GM. “Somebody had a decision to be made, and they needed to go in two different directions.

Bruce Belzowski, an associate research scientist in the Transportation Research Institute at the University of Michigan, says the new management structure makes sense because GM has shrunk from eight brands to four in North America and is selling off a majority share of GM Europe.

“They want to show their largest shareholder, the U.S. government, that they're going to do things differently,” he says. Belzowski does voice concern for the lack of new blood in GM leadership: All of the executive committee members were in leadership positions with GM prior to its bankruptcy.

At the same time, he recalls a U. of M. study showing corporate turnarounds often prove successful when they use hungry talent from an organization's lower echelons.

Rebecca Lindland, an analyst at IHS Global Insight in Lexington, MA, also questions the lack of outsiders atop GM. “Every single person started their career at GM,” she says. “Are they just moving the chess pieces around the board?”

Lindland also finds some of the departures puzzling, such as Gary White, North America vice president and vehicle line executive for fullsize trucks.

White oversaw two generations of the much-heralded GM pickups and SUVs, and his passion and expertise in the segment is well-known.

But don't expect GM's new quick decision-making to push the folks from, say, finance or purchasing into a corner, Cole says. For example, Honda Motor Co. Ltd. has leveraged its engineering expertise to great success, but the auto maker's bottom line always takes precedence.

Buick Gets Plug-In CUV in 2011
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