global leadership - assgmnt

Mary Barra’s Bumpy Ride at the Wheel of GM

 Rana Foroohar @RanaForoohar

Sept. 25, 2014

Barra, a former plant manager, at GM’s Orion Assembly in Lake Orion, Michigan. Photograph by Marco Grob for

TIME

The General Motors CEO has already faced a devastating

recall. Now she must reinvent the company—and its cars

GM CEO Mary Barra was, appropriately enough, in her car when she heard the news that the

company she’d been appointed to run two weeks prior was about to suffer the worst U.S.

product-safety crisis in recent memory. It was at the end of a cold day in January, and her

chauffeur-driven Cadillac Escalade was taking her home from the company’s headquarters in

downtown Detroit when one of her lieutenants, product-development head Mark Reuss, rang

with some very bad news. It was about the ignition-switch problem that would eventually lead to

the recall of 2.6 million GM cars. “He said he’d just learned we had this problem with the

vehicles and that we had to do a recall, and that it was large,” Barra recounts. “And then I

literally can’t remember [what happened next], because there was a period of probably 30 days

where–I don’t want to say it was a blur–but things were happening so quickly as we started to

look through what we needed to do.”

Those 30 days were the start of a very difficult 2014 for GM. The ignition-switch problems have

so far been blamed for at least 21 deaths, more than 500 injuries, four grueling congressional

testimonies by Barra, a $400 million victim-compensation fund to be doled out by former 9/11-

fund director Ken Feinberg and a damning internal investigation conducted by former U.S.

Attorney Anton Valukas. The 325-page Valukas report confirmed the worst: GM had known

about the switch problem since 2001, but because of a culture of silence, obfuscation and buck-

passing, no one had taken steps to fix the problem. There are continuing investigations of GM by

the U.S. Department of Justice, the Securities and Exchange Commission and 45 state attorneys

general as well as more than 100 private lawsuits. Meanwhile, GM has been battered by the

recalls of nearly 27 million more vehicles with different issues this year.

GM fired 15 employees who were determined to have been involved in the switch crisis, but

Barra and her top team were exonerated on the basis that they had been unaware of the problem.

“The day I read [the Valukas report] was one of the saddest days of my career,” says Barra, a 34-

year GM veteran. “The most frightening part to me was that [the report] said everything that

everyone’s criticized us about” over the years. “It was like a punch.”

It’s hard to imagine a new CEO being dealt a tougher hand. None of this was, as Barra puts it

with grim humor, “in the glossy brochures.” Yet she has marched through her first year with

good marks; her handling of the immediate situation has been lauded by many experts as a model

for corporate crisis management.

Barra’s legacy, and GM’s future, will depend on much more than how she handles the switch

crisis. Only five years after declaring bankruptcy and with a large chunk of its profit this year

likely to be wiped out by the recall problems, GM needs to sell some cars. Barra is betting the

company’s future on technology (she has committed to putting a nearly self-driving car on the

road by 2016), luxury (GM announced on Sept. 23 that Cadillac would become its own business

unit, with headquarters in New York City) and China, which is already Buick’s No. 1 global

market.

She’s also trying to take back market share in trucks, which have higher profit margins than cars.

In September, GM began selling two new midsize pickups that Barra okayed as head of product

development: the Chevy Colorado and the GMC Canyon, which will squeeze out a segment-

leading 27 m.p.g. (8.7 L/100 km) on the highway, thanks to a 200-horsepower, four-cylinder

engine. By next year, more Barra vehicles–such as a yet-to-be-named Cadillac and five new

Chevrolets, including a new extended-range Volt electric car–are set to roll off the lines.

Perhaps most important, Barra wants to make GM vehicles “the safest in the industry,” a striking

goal given the switch crisis. To do so, she’ll have to change a dysfunctional corporate culture in

which, as the Valukas report put it, “no single person owned any decision.” It is a problem that

has been with GM for ages. The question now is whether a woman who’s never worked outside

that culture, who was supported in college and business school by the company and whose father

spent 39 years as a GM diemaker, can fundamentally change it. Plenty of smart people believe

she can: Warren Buffett, who told me recently that he wished “her father could see her now,”

bought a Cadillac as a show of support. Certainly, the GM workforce is behind her: as one senior

staffer told me, “people were f-cking elated when she got the job.”

But some former insiders, like past GM CEO Edward Whitacre Jr., are more equivocal in their

praise. The reality is complex. After spending time with Barra for multiple interviews and

watching her interact with hundreds of employees, it’s clear to me that her status as a GM lifer is

deeply wired into her identity, but she combines it with a carefully controlled independent streak

that may ultimately prove the key to remaking the company.

The Insider’s Outsider

Barra, 52, is preternaturally energetic and likable in a down-to-earth, Midwestern kind of way.

Our initial day together begins at 5:30 a.m. with an hour-long drive to a GM facility in Burton,

Mich., in charge of assembling replacements for the faulty ignition switches. Despite the early

start, Barra, who forgoes coffee in favor of a Diet Coke she keeps at her side, is alert and

chipper. “I grew up in operations, and plants start early, so I’m kind of used to it,” she says.

Despite the breezy chitchat, it’s not easy to get to know her. She’s wary and on message in our

first interview, and only later, when I assure her that readers are interested in much more than the

Valukas report, does she let down her guard a bit. We talk about her kids, a son who’s thinking

about colleges and hopes to study bioengineering and a daughter who’s more of a creative type,

into fashion and writing. Barra, who has been married for 29 years to Tony Barra, a consultant, is

by her admission no domestic goddess; her daughter sometimes does the cooking. (They don’t

have a housekeeper.)

An engineer at heart, she’s stylish but practical. At one point, I compliment her on her killer

black suede heels. “Manolos?” I ask. “Yeah, I have a shoe thing,” she says, wrinkling her nose

with a bit of guilt. “And they are really comfortable!” Later, when a Time reporter tries to verify

Barra’s shoe brand, GM tells us that “Mary is a very private person and has requested that you

don’t name the brand of her shoes.” Perhaps she’s concerned that we’ll emphasize her style over

her substance, but I’ve asked plenty of male CEOs sartorial questions. How much they care (or

not) can be quite telling.

It soon becomes clear that she is, like many working women, an expert in balancing the public

and the private. She shifts gears effortlessly in one meeting from an analysis of the switch crisis

to the geopolitics of China to a refreshingly candid discussion of work-life balance. “Any

company will take 24/7 from you and not even feel bad,” she says. “You’ve just got to keep

balancing, learning and adjusting, and kind of not sweat it.” I soon realize this is part of what

explains her phenomenal popularity inside the company; she isn’t “leaning in” or sitting for

Vogue spreads or using her position as the world’s highest-profile female CEO to make any

particular statement. She’s just running a 219,000-person company that brings in $150 billion in

revenue annually with more emotional intelligence and better communication skills than many of

the men who came before her.

In that sense, Barra has already shifted GM’s culture–though culture is a word she deeply

dislikes, in part because she’s walking a fine line, trying to change things without totally

condemning an organization that many people, herself included, have given their lives to. “I hate

the word culture, because it’s like this thing that sits out there,” says Barra. “What is it? It’s how

we behave. It’s the stories we tell about the company.”

Today Barra is talking to about 300 employees at a town-hall-style meeting at GM’s Customer

Care and Aftersales headquarters in Burton, which is responsible for the logistics of the ignition-

switch recall. Clad in a simple black pantsuit, Barra sits on a stool, daytime-TV style, on a well-

lit stage. Off to her side is a shiny black Camaro convertible, her current favorite model. She’s

here because, as her minders tell me, this particular facility has been working long hours on

recalls and has beaten the delivery goals.

This is plainly a morale-building mission. She talks up how well the “team” is doing (she’s all

about the team), meets with workers who deserve special recognition, stresses the importance of

re-establishing trust with consumers (“We won’t get a second chance,” she tells a group of

middle managers) and tries to drum home the message of the newly rewritten GM core-values

statement: the customer comes first. “We’re in an industry where, when people get a new car, it’s

an exciting day,” Barra says. “Some people name their car!” The audience listens intently,

feeling the love.

Smoothly, Barra turns a bit sober. “I’m a second-generation GM employee. None of us expected

[the crisis]. But we knew we had to do the right thing, and we had to be transparent. We had to

be focused on the customer.” Standing ovation. Barra takes questions, many of which begin with

praise for her. “I just want to say how proud I am of how you are representing us and telling our

story,” says a female African-American manager. Says another participant: “You’re running the

greatest company in the world. You’re a mother. You’re a wife. How do you get some Mary

time?” Everyone laughs. Barra talks about how she likes to sneak away to watch her kids play

soccer or volleyball or ice hockey. Suddenly, it feels like we are on The View rather than in a

corporate-crisis meeting.

This, I came to think, is Barra’s singular advantage. As a member of a family with 73 years of

GM service, she’s the consummate insider. Yet as a woman–the first to lead a major automaker–

and someone with a very different personal style from most of her predecessors, she seems more

like an outsider. That ability to both project a sense of change and engender trust in a company

that’s still filled with lifers is one of the reasons Barra got her job. Early on, her former boss and

mentor Dan Akerson was referring to Barra as a “change agent.” Yet it’s a mark of how much

more change GM still needs to undergo that a rewriting of the corporate mission to explicitly put

the customer first counts as a big idea.

To listen to Barra recount the list of changes she’s orchestrated at GM–where she has held

positions from assistant to the CEO, to engineer, to plant manager, to head of human resources,

head of manufacturing and director of product development–is to understand how deeply

dysfunctional the company has been for so long. “I remember when I was in HR, I changed the

dress-code policy to ‘Dress appropriately,'” says Barra. Afterward, a manager in charge of tens

of millions of dollars in business came to her with a request that she write a more explicitly

worded dress-code policy so he wouldn’t have to have an uncomfortable conversation with team

members who wore jeans or too-short skirts. That experience, says Barra, “was such a window

into the company. A manager should be able to handle something like that.”

Indeed, Barra continues to struggle with getting even high-level staffers to take personal

responsibility. Recently she got a call from a woman in charge of planning a meeting with senior

staff. She wanted to double-check on who should attend, citing changes Barra had made to the

“dynamic” of the meeting. “My note back to her was, ‘Well, who do you think should attend?

Based on the agenda. You’ve been running this meeting for several years. Who do you think

should attend?'” The next morning, a list was presented to Barra. “I said, ‘Perfect,'” she says,

smiling.

Fixing all that is critical, not only for Barra’s success but also for anyone who gets behind the

wheel of a GM car. This sort of “transactional” decisionmaking, as Barra puts it, in which

everyone colors inside the lines of their own precise job description without thinking

independently or “holistically,” helped create the ignition-switch crisis. Barra continues to insist

that employees absolutely would have put their hands up if the switch problem had been properly

understood to be a safety issue, but it wasn’t. The Valukas report supports her take while also

stressing that GM employees were working in a culture in which cost cutting affected decisions

on quality. The Justice Department will no doubt be parsing that narrative carefully.

In GM’s old-think view, the switch crisis was the result of a mistaken step in a long process: the

engineer in charge of the switches redesigned the faulty part without renumbering it, thus

obscuring a change that could have helped various divisions uncover the issue in mysterious

reports of stalled cars over the years. But the mislabeling of the switch problem early on, as a

“customer satisfaction” issue rather than a safety issue, also reflects an internal practice of

hoarding rather than sharing information. People were afraid to pass bad news up the food chain.

In management-theory speak, GM is a deeply “siloed” place. And that’s not healthy.

“We didn’t have world-class processes,” says Barra. “But then again, we also didn’t have world-

class behaviors of ‘Hey, pick up the phone, make sure something’s done.'”

Change of this sort sounds basic, but in a company of this size hurtling with decades of

momentum and practice in the old ways, it’s not easy–as any number of former GM leaders will

tell you. “There was a sense of insularity,” says Whitacre, the onetime telecom executive who

served as chairman and CEO of GM during its insolvency. “It was tough to get to know people

and get a sense of the organizational structure.” Does he see Barra as up to the challenge of

fixing it? Whitacre hedges: “I wouldn’t call her a change agent, but she certainly wanted to do

things differently.”

Barra also gets mixed reviews from Bob Lutz, the former vice chairman of GM and a storied car

guy who favored Reuss, the product-development head, for the top job. “I didn’t see her as one

of the disruptive people in a meeting who would raise their hands and say, ‘Excuse me, Bob, but

I don’t think, with all due respect, that’s going to work.’ She always came across to me as being

nonconfrontational.” Still, says Lutz–whom no one would ever accuse of shying away from

confrontation–he likes the fact that she’s an engineer rather than a financier, like most of the

CEOs of the past few generations. “She’s always been on the side of the company that actually

makes things. And that’s a good sign, because those people are way more grounded in the reality

of what goes on as opposed to the financial folks who float at the top and delegate everything.”

Car Guys (and Gals)

Car Guys tend to have big Egos, Swagger and a certain street cred gained by doing things like

putting elbow grease into their own vehicles and being able to recite model minutiae like

baseball stats. (Reuss, the son of a former GM president, has a screen saver of a vintage Corvette

he rebuilt from scratch.) That’s not Barra: her persona is somewhere between soccer mom and

smooth-spoken corporate intellectual. Yet she seems to have unconditional support from

traditionalists like Reuss, perhaps in part because she’s so team-oriented. When I ask about new

car models she’s greenlighted, Barra quickly gives Reuss credit for much of the new technology

and systems integration in the soon-to-appear Cadillac and Buick models, which feature things

like active safety systems and a 4G LTE OnStar link that makes your car a traveling wi-fi hot

spot. Despite an American business culture that has put the focus on celebrity CEOs, research

shows that successful corporations are built on successful teams; Barra’s focus on the group is

strategically smart.

The next 12 months are vital for GM and Barra, because the company will release a series of

Marymobiles–vehicles created under her watch when she ran product development–that are

urgently needed to revamp the product line. First out are midsize, four-cylinder pickups: Chevy’s

Colorado and GMC’s matching Canyon. Pickups are a critical market for GM because of the

profit margins and the stiff competition from Ford and Ram. The next generation of Cruze, GM’s

top-selling car, will debut on a new global underbody it will share with other GM models. And

then there’s the high-tech Caddy from the newly independent Cadillac division. But in the core

of the car market, Barra faces another challenge: Chevy’s dull Impala and Malibu sedans won’t

be redone for another year.

While Barra may not be a traditional car guy, she’s also no bean counter. This is a woman who,

when growing up in a working-class family in Waterford, Mich., dreamed of becoming an

engineer. She was one of only a few women to study electrical engineering at General Motors

Institute, now called Kettering University. Barra tells me that as a girl, when her curling iron

would break, she would go with her father–a veteran of Pontiac Plant No. 14–into his basement

workshop and take it apart. “We might not get it back together, but we’d try to understand how it

worked.”

Barra still seems most comfortable on a shop floor. On this August morning, she’s arrived at

8:50 sharp for a tour of the Davison Road Processing Center plant, which is in charge of

assembling and packing the new ignition switches into boxes. She’s traded the Manolos for a

pair of sensible pumps and a yellow safety vest with her name on the back. She moves quickly

from point to point in the factory, receiving briefings from managers, line leaders, union reps and

workers, one of whom is wearing a T-shirt with World War II’s Rosie the Riveter and her We

can do it! slogan.

The tour leader explains to Barra that if she hears the phrase “Mrs. Johnson,” it is plant lingo for

the average customer. “I love that you are talking about ‘Mrs. Johnson’–that’s a great example of

how we care about the customer,” says Barra, interspersing her examination with compliments

(“I know you’ve been working weekends and evenings”) and questions (“How much longer

would it take to package all this if we switched to a different-size box?”) and even putting

together a few switches herself (she drops parts at first but quickly recalibrates, adjusting her

hand movements and position until she can keep up with the line).

At one point Barra stops abruptly alongside a line worker using a small magnetic tool to pick up

tiny parts and move them into place more precisely. “That’s so interesting. I’ve never seen that

tool before,” says Barra. The worker, a middle-aged African-American woman, tells her that she

picked it up at a dollar store. “What a clever idea. That’s so creative,” says Barra. “What a great

way to problem-solve.”

Later, in a meeting with higher-level staff, Barra tells the story about the dollar-store tool. Terry

Hoover, an industrial engineer in operations at the Davison Road plant who’s sitting near me in

the meeting, says he’s been with the company for 35 years and has never heard of a GM CEO

doing this kind of “in the weeds” plant visit–which even if true is a revealing glimpse into

attitudes about management. “I was really impressed with how she’s handled the whole crisis,

the Senate testimony in particular. I think she handled it a lot better than previous leaders would

have. There would have been defensiveness and denial–a ‘We didn’t do it’ kind of attitude. But

you can’t do that with this, and she didn’t.”

When I repeat the comment to Barra, she winces slightly. It’s clear that it pains her to hear

criticism of anyone who’s been on “the team.” She certainly won’t cop to details of any heated

internal debate over how to handle the crisis, something that would seem inevitable at a company

with as many stakeholders as GM. “We never considered being anything but factual and

transparent.” Did that mean she never got pressure from anyone, inside or outside the company,

to do things differently?

This is the one portion of the interview in which Barra averts her eyes slightly. “There were

different views put on the table,” she says, adding later that some of the people who put those

views out there are no longer at the table. “We had people with different experiences, but I think

the small team that we had [meaning the initial war-room team] had a lot of respect for each

other. We very quickly started saying, ‘What’s the right thing to do for the customer?'”

At the top of Barra’s list has been acting on the myriad recommendations from the Valukas

report. She says her team has already implemented about 90% of them, including restructuring

operations to prioritize safety and creating a more open environment for employees to raise a

hand when there are problems. As head of product development and manufacturing, Barra had

already done quite a lot of streamlining of the firm’s plants. Now she’s trying to shift the entire

organizational structure: to stop viewing a car as simply a collection of 30,000 parts, more or less

well engineered and individually designed. Instead, she says, it is a system that has to integrate

increasing amounts of complexity. Think vehicle-to-vehicle communications, wireless

capabilities and self-driving cars.

All this was the focus of Barra’s speech on Sept. 7 at the annual Intelligent Transport Society

conference, where she announced GM’s goal to bring a practically self-driving Cadillac off the

line by 2016. Customers from L.A. to Beijing want automakers to “mitigate, if not eliminate, the

congestion, pollution and traffic accidents that are the downside of automobiles,” which self-

driving cars could help do.

As unlikely as it may now seem, Barra hopes that safety will actually become GM’s competitive

advantage. “We used to have an organizational structure built around parts–the body, the interior,

the electrical structure,” says Barra. Unfortunately, she adds, that created a situation in which

people “were expert in this or that without recognizing people don’t buy this or that–they buy a

car, and we’ve got to pull it together, and people have to talk.”

The Valukas report provided an impetus to speed up Barra’s push for a more systems-focused

way of thinking at GM, something already under way before the crisis, but one with safety at the

center. Now a dozen systems czars in areas like materials, digital security and product integrity

work in a kind of spoke-and-hub style, with Jeff Boyer, the newly appointed vice president of

global safety, in the middle of it all. The hope is that developing products this way will help

catch issues like the ignition-switch problem in the future–and make safety a hallmark selling

feature of GM’s cars.

Barra has put the big brains in the company on implementing the Valukas recommendations.

One of GM’s best engineers, Kevin Wong, has been tasked with doing a root-to-branch

evaluation of the systems structure. But she’s also seeking ideas from outside, with Reuss

leading a team that is talking to leaders in the aerospace industry, the Navy and NASA about

how to manage organizational complexity and avoid catastrophic failures.

Other CEOs and global leaders have reached out with unsolicited advice or just a pat on the back

and a comforting “Hang in there.” One is JPMorgan CEO Jamie Dimon. Barra says she

appreciates how well he defended his people in the aftermath of the 2008 crash and that he was

so “transparent” when communicating through a crisis. On her bedside table is Condoleezza

Rice’s memoir No Higher Honor. “I find it fascinating because she shares so much about exactly

what she was thinking” during various geopolitical crises, Barra says.

Plenty of people will be interested to know exactly what Mary Barra is thinking as she navigates

an American corporate icon through the product-safety crisis of the decade. Will her tenure as

the first female CEO of a U.S. auto major be dogged by the results of the Justice Department

investigation? Or will she become a Harvard Business School case study in how to manage

corporate crises in the 21st century? Barra’s hopes for her legacy are less complicated: “I just

want to be part of the team that helped make GM the company I know it can be.”

This appears in the October 6, 2014 issue of TIME.