Ed Whitacre Might Just Have the Right Stuff

Being here in Motor City it is a relief to hear good news of late about the auto industry with some of the best being recent reports out of General Motors. Sales for April saw a 6.4% increase, the U.S. Government appears already to be preparing an IPO and the TARP fund payback is at an unexpected accelerated rate. This was probably not on the radar of anybody a year ago and it certainly wasn't how I expected things to pan out.

One of the dangers of writing like you know what you are talking about is that when you're right you look really smart but when you're wrong…well, not so much. In my column on TheStreet.com back in June of 2009, I argued that Fritz Henderson was the wrong choice for GM CEO because of his history as a GM lifer. I got that one right. Then in December of 2009, I speculated that the moves at the top were coming together to name either Ed Whitacre or Bob Lutz as CEO. I picked Bob Lutz. In this case, the GM board made a wise choice in ignoring me. (This happens a lot).

Whitacre  My thinking was that Bob Lutz had a wide range of experience and truly knows how the auto industry works. I thought he might bring his expertise along with fresh thinking, which would both be helpful to a GM recovery. Ed Whitacre, while having no real auto industry experience, brings not only the fresh thinking, but also a reputation from his days at AT&T as a make-things-happen kind of guy. It looks like this is not only a myth about Whitacre, but is instead a personal strength. His success so far seems to come from some specific Whitacre characteristics:

He knows how Washington works. As chairman and CEO of AT&T and the companies before it from 1990 to 2007, Whitacre spent a lot of time dealing with bureaucracy and politics. Whether you think this is a good or bad thing, it is smart because the U.S. government still holds 61% or GM. Washington put Whitacre in the position so knowing how to work with Washington is knowing how to work with your boss. 

He knows how to make hard decisions. Ed Whitacre has been as villified as any corporate executive throughout his high-level tenure. After the SBC/AT&T merger, Whitacre announced plans to layoff six percent of the combined payroll before the final approval had even taken place. As brutal as that sounds, AT&T had been losing market share and losing it quickly. If drastic moves had not been in place, he would have lost the faith of investors and possibly the opportunity to turn things around.

This issue of decisiveness may be an indicator of the third, and one of the most credible characteristics:

He is willing to be accountable. Although he took a lot of heat for being less than charismatic, Whitacre started his time with GM standing in front of the American people in a series of commercials where he not only said GM might be successful, he said it would be. You could accuse him of bravado and typical hot-air marketing, except he appears clearly on the road to delivering what he promised. At least from a shareholder/investor standpoint. 

There will be a lot of readers who disagree with my assessment and probably some who will disagree vehemently. Ed Whitacre will also continue to be vilified by some for the consequences to GM employees and the hard decisions that he made. This is one reason why the crisis-leader is very rarely the right person for the long-term leadership position. While he was not part of creating the problem, he is the one who has to take the blame for the pain of the solution. Once GM is public again it will be time for the board to look for a leader who can heal some of the internal wounds and focus on the future of the company. In the meantime, the mere existence of a publicly owned GM will be in large part because of the leader who is at the helm right now.  

Please note: I reserve the right to delete comments that are offensive or off-topic.

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