Turning Around GM
Edward E. Whitacre, Jr. is the Former Chairman & CEO, General Motors Company, and Chairman Emeritus, AT&T Inc. Whitacre currently serves on the board of Exxon Mobil Corporation. He was named one of the Top 25 Executives of the Year by BusinessWeek.
In March 2009, the White House decided that GM needed a new chairman and a new direction, and Whitacre got the call. When he was asked if he thought the “unfixable” company could be fixed, his answer was unwavering: Yes. Because despite what he was told – by the White House, Wall Street, and “car experts” around the world – one quick look at the company made clear to him that it wasn’t the economy or bad luck that got GM into trouble. It was bad management—and management he could fix.
Ed Whitacre: How did the automobile industry get into trouble? It’s a good question. I think it happened over a relatively short period of time. But I think, in GM’s case, they weren't building a quality product. They refused to modify their structure. Their expenses were really more than their revenues, and over a short period of time, if you don’t sell many cars you don’t get much revenue, your expenses are there, you run out of money and you go into bankruptcy. And that’s what happened.
Well, my strategy to turn around GM really was quite simple. And I say my strategy, it was the strategy of me and the top management team we put in place. And it’s mostly common sense, I think, but the first thing is you have to define what you want to do. And General Motors, I thought, had kind of lost its way and didn’t know what its mission was. And so we decided very early on that what we did as a company was design, build and sell the world’s best vehicles. That’s a pretty easy strategy to articulate. We did that to all the employees. We spent a lot of time with all the employees of GM saying, look, we design, build and sell the world’s best vehicles. We don’t do anything else. Everything else is sort of superfluous to that; let’s focus on that.
We also did some other things. We put in the right management team. We did away with a matrix organization and a matrix, as you know, is where you have multiple bosses and, therefore, you have no boss because you don’t know which one to listen to. So we did away with the matrix management and set up clean lines of organization. We tried to eliminate some bureaucracy. We empowered the people. We gave people the authority and responsibility to do a specific job. We held them accountable for that. I think just common sense management things. And they worked.
The workforce at GM was pretty disheartened as you can imagine. You’ve just come out of bankruptcy. You don’t know what the future holds. You’re being called “Government Motors” by everybody. In some cases your neighbors won’t speak to you because you’re in bankruptcy. You're embarrassed about going home or going to the grocery store. Some of your friends aren't your friends anymore. But there was one thing that really stood out to me and that is, the GM employees wanted to prove to everybody, hey, we’re not bad. We’re real good. Give us a chance, we’ll show you what we can do. And, by golly, they did.
Directed / Produced by Jonathan Fowler & Elizabeth Rodd
The workforce at GM was pretty disheartened when the company hit hard times during the recent recession. And yet, GM employees wanted to prove to everybody that they could design, build and sell the world's best vehicles. And, by golly, they did.
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