GM's VLEs: looking Sharpe; former Buick engineer guides new product-development process

It's a big, bright talented pool to choose from: The engineers and designers who make it happen in the U.S. auto industry. On this and the following five editorial pages, Ward's Auto World recognizes five men who are making a difference on the industry's technical side, starting with General Motors Corp.'s Dave Sharpe, who recently received a new title: Executive-in-charge of GM's Vehicle Line Executive (VLE) system.

In less than a year, David S. Sharpe has gone from a being a competent, reliable engineer putting the finishing touches on the new Buick Park Avenue to the guy in charge of reinventing the way General Motors Corp. develops future cars and trucks.

With his reddish-blonde hair, combed straight back, Mr. Sharpe hardly looks the role of a revolutionary. In fact, he was minding his own business on a chilly day in November 1994 when Donald E. Hackworth, group executive for GM's Midsize and Luxury Car Group, approached him with a proposal.

GM's product-development process was broken. Mr. Hackworth and others wanted to change it. They just weren't sure how, and they weren't offering Mr. Sharpe a title, or even much support. This was to become a skunk works focused on organizational reform.

Fifteen months later it has led to a new order that revolves around 13 vehicle line executives (VLEs), the product development leaders, and 35 brand managers--GM's new marketing leaders.

His official title is executive-in-charge of GM's VLE system, but think of Dave Sharpe as the Godfather of VLES. He has sweeping influence over how the job is defined. He is crafting a training curriculum designed to change the way people relate to each other. That, in theory, should improve the way GM brings vehicles to market.

"We are going to run NAO (GM's North American Operations) so we can take advantage of our size instead of it being a disadvantage," Mr. Sharpe says.

G. Richard Wagoner, GM's NAO president, says the goal is faster, crisper decision making.

"It's going to create a very health dialog early on that we have traditionally put off until late in the process," Mr. Wagoner says.

The key is to minimize the second-guessing and intramural backstabbing, and drum more accountability into the leaders responsible for a given car or truck.

In the past, Midsize Car Div. or Lansing Automotive Div. or North American Trucks worked with designers on a given vehicle without much interaction from the six marketing divisions, at least in the early stages of a program.

Then, in the final year before an assembly plant began building the vehicle, marketing people would jump in. Maybe they wanted to add cupholders. Maybe they wanted to move the spare tire from the rear liftgate to beneath the storage area. Maybe they wanted a passenger-side air bag.

Those changes added months of time and millions of dollars. The delays meant lost sales and lost profits. Maybe customers ultimately got what the market research said they wanted, but not on time or within budget. There were too many fingers in the pie.

By bringing the new product development leaders--the VLES--together with the new brand managers, Mr. Sharpe and Ronald L. Zarrella, group executive for North American sales, service and marketing, believe the overlap, miscommunication and second-guessing can be radically reduced.

But GM has been through umpteen reorganizations before, sometimes with disastrous results. Why will this be different?

Mr. Sharpe says this time around GM developed a system first and bor-rowed unabashedly from competitors, mostly Toyota Motor Corp. In fact, Mr. Sharpe spent weeks picking the brain of an unidentified former Toyota executive who freely shared his experience of what is widely regarded as the industry's most streamlined development process.

For example, Toyota conceived its RAV4 mini-sport/utility vehicle just reaching U.S. showrooms now and delivered it to Japanese dealers in less than 20 months.

"We would look at certain things they did and ask, `Would that work for us?'" Mr. Sharpe recalls. "Many times the answer was `No.' Our culture is too different. Many times the answer was `Maybe,' if we change one element or another."

Kim Clark, a Harvard Business School professor regarded as a guru of product development, was another key resource. For training, Mr. Sharpe has turned to Alfredo (Fred) M. Kofman, a Boulder, CO-based consultant specializing in helping hidebound corporations break confining old habits.

Strategically, Messrs. Sharpe and Zarrella are trying to tie design, engineering and marketing more closely than ever. To do that, each of the 13 VLES works with between two and four "brand managers," each of whom is responsible for a given model. For example, James Westby, the VLE for midsize cars, works with one brand manager for Pontiac Grand Prix, another for the '98 Oldsmobile Intrigue and a third for the Buick Century.

The brand managers report to the general managers of their respective marketing divisions: John G. Middlebrook for Pontiac Edward H. Mertz for Buick, John D. Rock for Oldsmobile, Roy S. Roberts at GMC, John O. Grettenberger at Cadillac and Jimmy C. Perkins at Chevrolet.

Those executives are still important because they remain the primary liaison to more than 10,000 GM dealers. They're the most visible spokesmen for their divisions, the high-profile product promoters. But, while GM doesn't want to acknowledge it publicly, a key element of the marketing general managers' power has shifted to these younger brand managers, a few of whom come from outside the auto industry. It is too early to know how the culture will digest that change,

Lisa Baird, 34, is in charge of the Pontiac Grand Am's brand image. She comes from Warner Lambert Co., where she managed such products as Listerine, Efferdent and Lubriderm. Her husband, Robert Baird, also 34, is brand manager for Cadillac Seville and Eldorado. The most recent line on his resume: general manager of the Wet Wipes division at Scott Paper Co.

Oldsmobile put its Silhouette minivan and Bravada sport/utility in the hands of Michael McEnaney, who comes from Ralcorp Holdings Inc., where he sold cereals and snacks. Jeffrey Cohen left a job marketing salty snacks for Nabisco Biscuit Co. to manage the GMC Jimmy brand.

Mr. Zarrella sees brand management as a clear departure from what he calls GM's traditional "product" management marketing. Among the most crucial contrasts:

* Vehicles must be targeted toward clearly defined consumer groups. Too often a car like the Pontiac Bonneville has gone after the same buyers as, say Oldsmobile's 88.

* Advertising must be consistent in message and spending throughout the life of a vehicle. Traditionally, GM has promoted heavily when a car is introduced, then supported it only occasionally as it ages.

* Consumer response should eventually be based on the image of the brand rather than the features of the car.

Only time will tell whether it works. The VLEs and brand managers are just now beginning work on the first vehicles that will reflect the new approach, and those won't come to market until the year 2000 or beyond. Mr. Sharpe knows pundits will grade the VLE system long before that.

"I'm confident reason will prevail," he says. "If someone were to say the VLE system doesn't work when we come out with a 1998 car that doesn't hit the mark, the truth is the gestation period for that car is practically over right now. There's not much we can change."

It all comes down to process, says Mr. Sharpe, using the mind-numbing buzzword that can carry different meanings to different people. In the new GM-speak, the full phrase is "portfolio management process."

Here's how it's supposed to work: the company's North American Strategy Board will keep a portfolio of vehicles the company needs over the next decade. Think of it as a career path, or market description, for each car or truck GM makes. The portfolio defines each new product, keeping track of which existing vehicle it replaces, the size, a summary of who is supposed to buy it, how profitable it should be and, within a range, how much it should cost--in short, a business plan stating why the company needs it.

Those visions will be passed on to the appropriate VLES, brand managers and, their teams of 12 to 20 people. The teams will review the broad parameters, debate the bosses' suggestions, make revisions and send it back up to the Strategy Board.

After reaching agreement, Strategy Board members and the VLES sign a contract. The team then begins its work, in theory, free of meddling from above. Out of all of this, within an average of 38 months, there is supposed to be a new Chevrolet Cavalier or Cadillac Seville or Pontiac Binneville.

It sounds good on paper.

But not all die VLES are engineers. Some have never fielded the confrontations and conflicts that inevitably arise when making trade-offs between cost and design goals.

To make VLES and brand managers more accountable, Mr. Sharpe says they will be responsible for the profitability and market-share performance of each vehicle they introduce. Fatter margins will mean bigger bonuses. Losses on a given car line will mean less compensation for the VLE and his brand managers.

Some vehicles are created to be more profitable than others. It's no secret that GM's Small Car Group is still struggling to bring high-volume programs like the newfor-'95 subcompact J-car into the black. Will improvement within money-losing programs be rewarded to the same degree as maintaining already comfortable profit levels on SUVs and pickup trucks?

"We're not trying to lose money on any vehicle, but the compensation will be reflective of profitability targets that may vary from one segment to another," says Wagoner.

If this entire experiment bogs down into a "my-bonus-is-bigger-than-yours" contest, Mr. Sharpe understands the cause is lost. That's why VLE training involves informal contracts of interdependence--written pledges not to invade another VLE's turf. Each of the 13 meets monthly with Mr. Sharpe to explore whether there is compliance on that issue.

Every three months the VLE and his corresponding brand managers gather with Mr. Sharpe in what he calls "immersion days" during which they talk about what's working, what's not, and what adjustments are needed to stay on the prescribed course.

There will also be outdoor training under the auspices of GM's Saturn Corp. subsidiary's Outside Services, where the VLE teams will climb walls, jump from poles and engage in other exercises designed to build trust.

"I've been around long enough to know these people aren't all going to love one another every day of the week," Mr. Sharpe says. "Our goal is to take those differences and make them a strength. If one person is always raising questions, make sure everyone understands he will be the devil's advocate, a role we need filled, rather than a malcontent who doesn't buy in."

Mr. Sharpe says his wildest dream is for a VLE whose cars aren't selling well enough to keep his plants running at full capacity to offer part of a factory to another VLE who can't keep up with demand.

For those who have grown up in GM, that may be the day die sun rises m the West.

"If you can look past the differences you confront in any organization or with any individual, you can find a kernel of value," Mr. Sharpe says. "The key is to maximize that kernel and minimize the conflict."