Serious doubts about the new Chairman of GM

June 15th, 2009

By Scott McKain, co-founder of The Value Added Institute

If my very future depended upon selecting a single person to sink just one basketball shot, I’m picking Michael Jordan.  If my life hung in the balance, and one individual from our history had to present an oration that would determine my survival, I would beg Martin Luther King to speak on my behalf.

So, why in the moment of its greatest trial would General Motors — described by now-CEO Fritz Henderson as desperately needing to succeed in two areas: “product and customers” — turn in its time of crisis to someone with 43 years experience at the phone company?  Don’t get me wrong, Edward Whitacre, Jr. changed the landscape of that great American institution, AT&T, re-shaping it from a monopolistic giant into a diversified, competitive enterprise.  He took the smallest of the so-called “Baby Bells” — SBC — and created a global powerhouse.

The problem is that what Whitacre foresaw for his company then — colossal technological change and rapid consolidation — is not the immediate future of the automotive industry.  It was never the case that customers didn’t want to buy a phone; instead it is that we wanted more of the communication services they had to offer in new and exciting ways.  On the other hand, few of us are thrilled by what we have to endure to purchase an automobile.  GM has become so disconnected from its customers, that we will do just about anything to avoid interaction with them.

AT&T grew because of the technological advances in their industry — not because there were so customer-centric that they took existing market share from their competitors.  Which, of course, is the very aspect that GM needs to execute to survive.

When it comes to AT&T Wireless, for example — does anyone doubt that whatever degree of success they’ve had lately was more dependent upon Steve Jobs than the system that Ed Whitacre established?  Apple’s iPhone — and the entire customer experience created by Apple Stores — has driven almost all of the advancements of AT&T Wireless.  If the AT&T stores were regarded as customer focused, why did the vast majority of us go instead to Apple to buy our phones, and only reluctantly endure the AT&T experience?

It is a bit odd that in this time where the Administration is stressing fiscal discipline and reduction in executive compensation that the pick for GM’s Chairman is a man who, according to “Corporate Library,” left his previous position with a retirement package valued at $158.5 million. Yet, you don’t assemble companies like the one AT&T became under Whitacre without knowing your way around all three branches of government.

That’s why the fundamental reason for Whitacre’s selection should be painfully obvious — GM is more focused upon a Chairman who can work with governmental overseers than inspire dealers and create products that connect with customers.  For all of CEO Henderson’s posturing of the past several days — and he’s done a pretty good job at it — it speaks volumes that the selection of GM’s Chairman is someone from another industry that, like the car business, was formerly bloated beyond description, took those who sold their products for granted, and often treats those who spend money with them as chattel.

If the Administration really believed what their hand-picked CEO was saying — that products and customers make the difference — why not be really distinct in the selection of Chairman?  Why not ask Steve Jobs to lead GM instead of returning to Apple at the end of the month?  It would be interesting to challenge him in a similar manner to the provocation he issued to John Scully all those years ago.  Howard Schultz at Starbucks knows a thing or two about the customer experience.  Alan Lafley is retiring as CEO of Procter & Gamble and he excelled at retailing, manufacturing, customer relationships, and organizational change.  Why insist that Roger Penske purchase Saturn to make his point?  He already knows every aspect of the automotive business — and would be someone who would excite the imagination of every car lover on the planet.

In the final analysis, there is really a solitary reason that this particular type of choice is made — GM has a greater desire to get along with the owners than the customers.  The skill that was sought — like I’d have Jordan take the shot or Dr. King give the speech — is not to direct the corporate strategy to create distinct products and distinctly positive relationships with prospects and customers.  What matters most to those who selected Edward Whitacre is simply the ability to work with the regulators.  And, as becomes obvious, it’s now undoubtedly Obama Motors, and not any kind of General, or customer focused, one.

Scott McKain is the Vice Chairman of Obsidian Enterprises, co-founder of The Value Added Institute and author of “Collapse of Distinction – Stand Out and Move Up While Your Competition Fails”.  Read more on his blog at http://mckainviewpoint.com/.

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