Barra's Last Harrah

The accolades continue to pour in for Mary Barra, General Motors’ longest and still serving CEO.? Seen to be on a glide path to imminent retirement with no successor in sight, Barra is the teflon chief executive who appears to be able to do no wrong in spite of the diminished clout of the once-dominant auto maker and massive multi-billion dollar bets – on EVs, autonomous vehicles, car sharing - that have failed to pan out.

Critics, skeptics, journalists, colleagues must acknowledge that GM has returned to sales leadership in the U.S., even if the company plunged from number one in the world in 2011 to number five (or six) under Barra’s direction.? And the company reported increased profits in its latest fiscal year – continuing a string of profitable years.

(The company’s stock price is virtually unchanged after 10 years under Barra.? The company had 167,000 employees in 2022, down from approximately 200,000 when Barra’s term began. ?GM sells about a third fewer cars than it did when Barra was promoted to CEO.)

The new year will begin with a new narrative regarding Barra starting her second unprecedented decade at the helm of GM.? Apparently, Barra will kick off that second decade not with a CES keynote – missing the chance for a three-peat after keynoting the event in 2022 and 2023 – but with a $10B stock buyback

“Mary Barra Spent a Decade Transforming General Motors; It Hasn’t Been Enough” – WSJ - https://www.wsj.com/business/autos/mary-barra-spent-a-decade-transforming-gm-it-hasnt-been-enough-d82f4c5a?mod=Searchresults_pos2&page=1

“GM’s Barra Reboots Her 10-year Effort to Lift Stagnant Shares” – Reuters - https://www.reuters.com/business/autos-transportation/gms-barra-reboots-her-10-year-effort-lift-stagnant-shares-2023-12-14/#:~:text=Now%2C%20as%20she%20heads%20toward,short%20of%20EV%20output%20goals .

GM is nothing if not a powerful marketing engine – spending billions of dollars to convince consumers that they want the cars that “the general” has designed and built for them.? (The official line is that GM builds the cars that consumers want, but when it takes 3-4 years to design and build a car you need to make people believe they want what you’ve got.)

Barra has said and done all the right things for Wall Street and has kept GM on a profitable track, of that there is no doubt.? It is difficult to avoid the uneasy feeling, though, that something is awry at the Renaissance Center in Detroit.

For all its marketing might, GM and Barra have been almost completely silent on the topic of vehicle architectures and the so-called software defined vehicle movement in the industry.? As GM’s greatest strength, Barra may also represent its greatest liability.

The Wall Street Journal tells us: “Barra, who turns 62 on Christmas Eve, seemed an unlikely force for cultural change at GM. After all, she had spent her entire career immersed in the culture. She got her electrical-engineering degree from General Motors Institute—a four-year, auto-industry-focused school once owned by GM and now named Kettering University—and started at GM as an 18-year-old undergrad, inspecting fender panels at a Pontiac factory.

“In the late 1990s, she took a job as an executive assistant to the CEO and later became head of human resources.”

The WSJ says a mouthful with that small phrase: “an unlikely force for cultural change.”? Barra was a sheep in wolf’s clothing.? For all the shattered-glass-ceiling and first-female-CEO headlines, Barra represented preservation of the status quo even if it meant jettisoning vast overseas operations and making a few risky investments.

What GM really needed was real change.? Change in the way cars were designed and built.? Barra came up through the ranks of a hardware-centric operation.? What GM needed and still needs is an organizational shift designed to support an architectural change in its vehicles and a cultural change in its view of the world.

GM is not alone.? Most legacy auto makers are more or less in the same boat.? Still designing cars with a hardware-first mentality that privileges devices over code in critical design decisions.

The process is exacerbated by a complex supply chain that has a tendency to overwhelm the general contractors – the auto makers.? With dozens if not hundreds of suppliers delivering disparate components, the challenge of coordinating or mastering and owning the design process is akin to Lilliputians overrunning and pinning down Gulliver.

Tesla opted to flip the script and control its destiny by doing most of its development in-house – particularly software.? More even than that – Tesla opted for a software-first philosophy unmatched by any “legacy” OEM.

But a software-first design philosophy was not enough to transform the industry.? Tesla’s Elon Musk brought a sense of urgency – also unmatched in the industry.

As reflected in Walter Isaacsson’s “Elon Musk” narrative, every day at Tesla – even to this day – is an existential crisis.? Deadlines need to be met.? Software needs to be updated.? Factories need to be built, staffed, and opened.? Regulators need to be cowed.? Litigants need to be defeated.

Musk has brought a bunker mentality to the process of building cars that simply does not exist elsewhere in the industry, with the possible exception of China (home to approximately 100 auto makers).? Barra cruised into her leadership position as a GM lifer – reflecting the prevailing sentiment across the company that a job at GM was a guarantee of lifetime employment and a comfortable retirement.

Barra had an early indication of the fix in which she found herself when, within a year of being named CEO, the ignition switch fiasco unfolded.? Soon journalists were reporting on the GM shrug – as in GM executives shrugging off responsibility for or even knowledge of the ignition switch failures, which had actually occurred under Barra’s own nose.? She shrugged off the opportunity to change – shifting responsibility to underlings who were fired.

Culturally, engineers at GM would develop and launch systems and then move on to the next assignment with no responsibility for the long-term outcome of their work.? Teams responsible for a particular component would jealously defend their roles rather than recognize the need to consolidate components, ultimately centralize architecture, and finally prioritize software over hardware.

Barra looked like a disrupter but was in fact a corporate culture preserver.? The change agent that was selling off overseas divisions and touting EV tech, was obscuring the real change that was required to be competitive with Tesla in a software-centric automotive industry.

It’s neither too late nor impossible for Barra and GM to right the ship.? The challenge will be to push aside the marketers and the attorneys and the investors and embrace the organizational, cultural, and architectural change that will create real value for stockholders.

Success will only come with pain.? While Musk has actually transformed the entire automotive industry and continues to do so, he has also alienated regulators, some consumers, and a lot of his own employees.

Hardly a day passes without some new group of Tesla workers protesting the working conditions at Tesla.? This is to say nothing of Tesla’s white collar turnover which is considered by many to be stratospheric.

In two weeks, large numbers of automotive executives will be attending the CES 2024 show in Las Vegas where hundreds of former Tesla executives will be walking the aisles either already employed at competing companies or looking for work.

Most of these executives will say the same thing – that working at Tesla was the most amazing experience of their career – but they couldn’t take it any longer.? This contrasts with the typical GM executive who is more than likely eying his or her approach to the career retirement finish line after decades working for one company – like so many other legacy auto maker executives.

At a time when corporations are bending over backward to create inviting, pleasant, and supportive workplace environments, startups like Tesla are cracking skulls and taking names.? Amazon, another automotive industry disrupter, is notorious for hoovering up senior automotive industry executives – and almost simultaneously spitting them out after wringing them out.

Barra may have to summon her inner Musk to elevate the sense of urgency at GM and rewrite the script for designing and building cars.? Now that her own legacy is secure – pick your fawning profile: “Charging Ahead: GM, Mary Barra, and the Reinvention of an American Icon” – David Welch; “Road to Power: How GM’s Mary Barra Shattered the Glass Ceiling” – Laura Colby – it’s not too late to bring real change.? How about it, Mary?