The Real Deal

When I started reading the just-published American Turnaround: Reinventing AT&T and GM and the Way We Do Business in the USA by Ed Whitacre (with Leslie Cauley; Business Plus), a book that should be required reading for any and all in the auto industry, as well as for the segment of the U.S. population who doesn’t understand the importance of General Motors to the U.S. (importance economically, socially and culturally, domestically and internationally), something on the first page (yes, I didn’t get too far)—heck, the first couple lines—caused me to wonder: “Bolt holes.  That was the main concern, the only concern, really, of one senior executive at General Motors right after the company emerged from bankruptcy.”

Whitacre had been appointed chairman of the company by the U.S. government, and as a man who’d spent his career in the telecommunications industry—retiring as chairman of AT&T, no less—he admittedly didn’t know about the car industry, and wanted to learn more about GM’s problems—remember, it just emerged from bankruptcy—by asking questions.  Whitacre writes that he was somewhat flabbergasted by the bolt hole response from a senior manufacturing executive.

Since accurately located holes are fundamental to building cars and trucks and for achieving quality, I couldn’t understand why Whitacre seemed so taken aback.  So I sent an email to a publicist handling the book, asking if she might forward the message to Whitacre.  I anticipated maybe getting an emailed response.

A few minutes ago, the phone rang, I answered it (we run pretty lean here), and the voice on the other end said, “Hi.  This is Ed Whitacre.”  And he proceeded—after talking about taking his 10-year-old grandson to Grandparents’ Day at school, and how amazed he was at how much the youngsters know—to explain the situation regarding the bolt holes.

Yes, he knows how important they are.  He appreciates that.  But what he couldn’t understand was how, after GM was saved by the U.S. and Canadian governments and the UAW, how it was saved in the face of ultimate doom, its leadership seemed so very myopic.  Remember, this was a senior executive—a smart man, Whitacre told me—who had quite nearly been out of a job along with thousands of other people, and when Whitacre asked him about his concerns, about what was going on (“It was sort of chaotic there”),  he was concerned with bolt holes.  “There were 10,000 other questions that had to be asked, and he was concerned about that?”

Arguably, this lack of understanding of what was going on in the business by top management brought GM to U.S. Bankruptcy Court on June 1, 2009. As Whitacre writes in the book: “The economy didn’t get GM.  Mismanagement did.”  He adds, “Good managers sometimes make bad decisions, no question.  But good managers don’t make bad decisions consistently.”  And what he discovered in Detroit was a cadre of managers who weren’t doing their jobs, weren’t seeing reality.

There has been some criticism of Whitacre as regards the significant change he drove in the management ranks at GM.  Whitacre writes, “How could the same management team that stood by while GM’s stock price plunged more than 90 percent, stood by while the company racked up losses of $82 billion, stood by while the cash reserves got drained down to nothing, suddenly spout wisdom and steer that company back to profitability again?  The short answer: They couldn’t.”  Whitacre found an organization mired in matrix management, an approach that is less about timely execution and more about covering one’s posterior.  When managers do that, they are abrogating their responsibility to the people who work for the company, and Whitacre finds that unacceptable.

A friend of mine had the opportunity to work with Whitacre at GM.  And she told me of how he would walk into people’s offices, sit down with them at lunch tables, go out to the Tech Center and walk around, and ask questions.  And the answers he got were not about bolt holes but about the ways and means to make the company better, about the hopes and dreams of the people who were working for a company whose neighbors might turn their noses up at (“Government Motors”).  “They loved Ed,” she told me.

And I understand why.  He’s the real deal.