GM's changes rattle stability
Leadership swaps, rush to IPO may not ease investors' minds
General Motors Co. is in a box of its own making.
In hurrying to project leadership stability ahead of an initial public
offering filing, possibly as early as today, the automaker also risks
more turmoil among the insiders who will have seen four CEOs in less
than two years. Come Sept. 1, Ed Whitacre Jr. will be out, Daniel
Akerson will be in and interested folks could be excused for wondering
whether the new bosses know what they're doing.
"It's a bummer that Ed's leaving in the third inning of this game," a
ranking GM source close to the situation told me Monday. "People had
gotten used to Ed ... and they kind of liked him."
Whitacre is un-GM personified. He'll casually drop in at meetings
unannounced; visit a plant in one of is trademark "drive-bys"; grab
lunch at the food court in the Renaissance Center. He also, in
business-speak, reduced the "span of control" of many execs even as he
more sharply defined lines of authority -- and accountability.
Like him or not, enjoy his Texas drawl or not, Whitacre-era results are
boosting confidence as much inside the company as they appear to be on
the outside. The challenge for Akerson is leveraging his financial
acumen to bolster external credibility without losing the internal
momentum that gives GM a future it can actually sell.
The paralyzing "am-I-gonna-get-fired" fear of the early Whitacre days is
dissipating in favor of a new cultural ethos that favors speed and
decisiveness, ranking executives tell me. Akerson can and should keep
the pedal to the metal, but sowing fear and arbitrary change is probably
as detrimental to the IPO business case as instability in the CEO's office.
The headlong rush to peddle shares in the new GM to investors clearly is
a political imperative of the Obama administration, desperate for a win
to vindicate its massive intervention in the auto industry. And an IPO
is the quickest way for GM to shed the sales-killing "Government Motors"
wrap -- in theory, at least.
In that, if for different reasons, the feds and GM are in perfect
alignment. They're also both in a hurry. The problem is context and a
few tiny problems with the lackluster market, balky consumers and a
selling rate running at historic lows.
Would-be GM investors will need to be persuaded that owning a piece of
GM is a smart play for the future amid a presently slowing economy,
slumping consumer confidence, sideways equity markets, weaker growth in
Europe and China and the prospects that tax burdens for many Americans
are set to go up, not down, after Jan. 1.
Whitacre and Akerson, expected to meet today in Detroit with GM
executives, can spin this battlefield promotion all they want. But this
changeover was hastily executed because the prospect of Whitacre selling
the company on a grand "road show" only to sashay out the door at the
end of the year or early next exposed him and GM to too much legal
Just asking, but shouldn't they have thought of this before?
Of course they should have, which shows that the Masters of the Universe
now populating GM's board and the Team Obama fixers who put them there
can make mistakes, too. The test is how they fix them.
Given the risks Whitacre faced -- sell an IPO, bolt for home in Texas
and expose yourself and GM to lawsuits -- and the hurry-up schedule to
do an IPO, Akerson may have been among the few legit moves for the
directors to make.
At least he can claim to have been at the new GM since its debut, to be
among the bluntest noses among GM's outside directors, to have been atop
auto czar Steven Rattner's short list to head GM coming out of
bankruptcy, which he was.
Beyond that, there were few plan Bs. Not enough time to woo an outsider,
whose learning curve and style risked even more turmoil. Too soon to
promote CFO Chris Liddell, a Microsoft Corp. refugee, or Tim Lee,
president of GM International, or Mark Reuss, president of GM North
America, to the top job. Any of them, but especially Reuss, would have
elicited howls of "not ready for prime-time."
The howlers probably would have been right, too. Bankruptcy and the
early Whitacre purges depleted GM's ranks of management talent with deep
operating experience. Government pay caps make it challenging, but not
impossible, to attract outsiders who cannot afford to take the financial
risks that the likes of Whitacre and Akerson can. And GM's new board
isn't about to give the top job to a GM veteran without thorough seasoning.
Another new era for the company that "never" changes top management is
arriving. The trick is bringing everybody else along because even the
most deft CEO can't do it all by himself, as the past three inhabitants
of the top chair could attest.
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