How a CEO taught his company to stop passing the buck and start making progress.
One of the most durable images of the 2008 auto industry crisis was the meeting of the heads of the three major U.S. automakers to beg Congress for a bailout--having flown to Washington in three private jets. One of these executives, GM Chairman Rick Wagoner, got the government money but lost his job. Enter Ed Whitacre, the plain-talking, Texas-drawling retired chairman of AT&T, whom the Obama administration asked to help the nation's largest automaker out of bankruptcy.
In his memoir American Turnaround, Whitacre, with the help of his cowriter, Pulitzer Prize-nominated business journalist Leslie Cauley (author of End of the Line: The Rise and Fall of AT&T), enumerates the myriad challenges he faced: a precipitous drop in market share, $82 billion in losses over five years and a 95% drop in share price even before bankruptcy rendered its shares worthless. Mostly, however, he was horrified at the lack of urgency, accountability and connection to the rank and file he found in GM's executive suite. The automaker's leaders, he lamented, didn't see themselves as responsible for their company's situation, instead blaming the economy, the government, the unions--just about anyone but themselves. In doing so, they broke Whitacre's number one rule of leadership: The buck stops here.
Whitacre is an old-fashioned guy with little patience for fancy management schemes like Six Sigma or GM's "Matrix," in which employees report to multiple managers. These systems, he argues, diffuse accountability so that no one needs to take full responsibility for their decisions. Instead, Whitacre believes in clear-cut hierarchy--but one in which responsibility, not privilege, increases as you ascend the chain of command. In fact, throughout the narrative Whitacre underscores his belief that the rank-and-file workers are the lifeblood of any company.
One of Whitacre's most notable innovations at GM was to increase the interaction between upper management and the rest of the organization. Another was to chip away at the Matrix by giving executives clear-cut roles and responsibilities and then delegating to them 100% of the decision-making authority. If they rose to the challenge, they were rewarded accordingly. If not, they were out the door. One striking example of this strategy was the delivery of the Chevy Volt--GM's much-anticipated plug-in hybrid vehicle--as the public symbol of the "new" GM. Whitacre set a deadline for the launch and demanded his executives to figure out how to meet it--which they did.
By the time Whitacre left, after just 16 months, GM had achieved its first profitable quarter in five years and raised $23 billion in the world's largest IPO. As Whitacre put it at the outset, the feat wasn't magic. Rather, he said, "It's called management."
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