Sailboat Racing: What’s Behind the Strategy of GM’s Next CEO Mary Barra?
Mary Barra, the next CEO of General Motors Co, sent a powerful message to colleagues last year when she challenged about 250 designers and engineers at GM’s Vehicle Engineering Center – to a paper sailboat race.
“She wanted them to have fun at a highly stressful time, but also encourage teamwork and collaboration … to show that’s how we run our business on a global basis,” said John Calabrese, GM’s vice president of global engineering.
Patterned after an April event that Barra and team members staged with third graders at Detroit’s Bates Academy, the internal “skimmer” competition brought together teams of executives vying for such awards as fastest boat, most creative design, best logo and most over-budget.
In deceptively simple fashion, the sailboat race addressed perhaps the biggest concern to Wall Street analysts and investors and the major challenge facing the 52-year-old electrical engineer and Stanford MBA: How to continue breaking down silos and walls within the US automaker’s historically dysfunctional and disconnected corporate culture and remake GM into a more collaborative and customer-centric enterprise.
When she takes the reins from Dan Akerson on Wednesday, Barra, a Detroit-area native and GM “lifer” who started as an 18-year-old intern in 1980, also will be expected to tackle some unfinished business. Among her tasks: Overhauling GM’s global brands, reviving and returning to profitability the company’s battered European operations, and fattening up profit margins, which lag those of major competitors.
Barra’s promotion has drawn mixed reviews outside Detroit, where she is little-known. Even Wall Street has expressed some skepticism.
“Her reputation is (as) a bit of a lightweight,” said an investment banker who has worked with GM. “She has not distinguished herself in any heavy-duty operating role. She’s sort of a blank slate.”
That is not the case at GM, where Barra’s father, Ray Makela, was a diemaker at Pontiac for 39 years and where she trained on the factory floor while earning a degree at General Motors Institute in Flint, Michigan. Barra’s career started to pick up speed after she won a GM fellowship to the Stanford University MBA program, from which she graduated in 1990.
Positioned on the management fast track at a relatively early age and mentored by a number of top executives – virtually all men – Barra was given increasingly greater responsibility as she knocked off one task after another. Most recently she has helped spearhead GM’s ongoing globalization efforts, focusing the past three years on reducing cost, complexity and waste in the automaker’s sprawling product development and manufacturing operations.
To date, she has been only partly successful in increasing the number of parts shared by GM vehicles around the world. The company still trails US rival Ford Motor Co and European giant Volkswagen AG in moving its products to common platforms.
GM under Barra is aiming to shift more vehicles to a handful of core platforms that will offer a greater degree of flexibility and parts interchangeability, thus reducing engineering and production costs. But that shift appears to be at least several years from completion.
Barra has demonstrated her technical and financial chops in a variety of key jobs over the past 15 years.
Following a three-year stint as an executive assistant to then-Chairman Jack Smith and Vice Chairman Harry Pearce, she was tapped in 1999 to head internal communications, a role in which she helped GM repair relations with the United Auto Workers after a crippling strike in Michigan.
She then spent two years as an executive director in GM’s North American vehicle operations before being assigned in 2003 to oversee the launch of the Cadillac DTS and Buick LeSabre as manager of the Detroit-Hamtramck assembly plant.
Her knack for team-building still resonates a decade later with George McGregor, president of UAW Local 22 at the plant. McGregor described Barra as “a people person, great to work with.”
One criticism of Barra, according to a former GM executive who worked with her, is that “she was never in a job long enough to have much of an impact.” Several of the people interviewed for this story asked not to be named because they still do business with GM.
The record – and the recollections of more than a dozen current and former colleagues – tells a different story.
Although she has not run a GM operating unit – a traditional stepping stone to the corner office – Barra in the past 10 years has headed three critical areas: Manufacturing engineering, human resources and, most recently, product development. She has made significant contributions in each job.
As executive director, then vice president, of manufacturing engineering from 2004 to 2009, Barra worked with a team of top executives to overhaul and streamline GM’s tangled production plants and processes around the world and better integrate them with product development, according to Gary Cowger, former group vice president of global manufacturing and labor relations. As a result, GM has been able to trim development costs and move products to market quicker.
Then-CEO Fritz Henderson shifted Barra in mid-2009 to head human resources as the corporation was undergoing a painful bankruptcy and tumultuous restructuring as part of a $49.5 billion US government rescue.
Barra revamped and simplified the company’s convoluted HR policies and procedures and loosened the dress code, encouraging employees to dress “appropriately,” colleagues said. She also helped new CEO Ed Whitacre, the former AT&T Inc chairman who replaced Henderson in late 2009, to thin GM’s swollen management ranks and shuffle jobs and personnel.
“She and I spent a lot of time together trying to reorganize GM,” said Whitacre. “She’s steady in the boat.”
Barra may have had the greatest impact – and encountered the most internal resistance – as head of GM’s $15 billion global product development group since early 2011.
Her contribution was not only to continue the global platform consolidation, but, as she did at HR, to streamline and simplify the way things got done. She managed some “significant business pruning,” according to Jim Queen, former group vice president of global engineering. This included reducing the number of managers on each vehicle development team.
Barra also revamped the product development process, breaking down each platform into modules and subsystems that could be more easily shared from region to region, according to a longtime Detroit-based auto consultant who has worked with GM.
“These are not minor changes,” the consultant said. “There was strong resistance from the different regions to do that (but) it has happened pretty fast and relatively smoothly, with a team that is now definitely more consistent and more united than before.”
Her more than three decades of experience at GM and deep knowledge of the GM system set Barra apart from Akerson and Whitacre, the two most recent CEOs, while her extensive technical background is radically different from Henderson and Rick Wagoner, the two GM finance veterans who held the job prior to Whitacre.
Her hands-on management style, emphasis on teamwork and ability to express compassion are distinguishing hallmarks.
Two GM colleagues described regular meetings that Barra has held for smaller groups of employees, some to explain technical issues or discuss profit targets, others to map product and process changes that could have a broad strategic impact on the company and its financial health.
Barra’s warmth and her collaborative approach to problem solving have won her many admirers inside GM, said another colleague: “She engenders loyalty through example and kindness.”
“She rarely is the one who speaks first,” said a source who has worked with Barra. “She makes sure everyone is heard” and when the time comes, she speaks – and makes a decision.
She will need that confidence and support to continue attacking the inefficiencies, bloated bureaucracy and cultural issues that nearly strangled the old GM.
Her selection as GM’s next CEO could be “the most important decision that Dan Akerson has made,” said analyst and longtime GM-watcher Maryann Keller. “But you won’t know until she actually gets the job and appoints the people that she wants around her to help her finish a job that’s only partly done.”