A Lesson From Mary Barra on Shifting Strategy Gracefully

On the cover of Time, the magazine labeled Barra “The Mechanic,” In her Wall Street Journal interview, she said she needs to be “tougher.” Such things may be helpful in acquiring confidence in her leadership, steering attention toward the many significant attributes of the company, and getting past the awful episode of recalls, Congressional hearings, taking apart GM’s culture, lawyering up, and dealing with accident victims’ families that now is drawing toward a conclusion.

But on October 1, Barra pivoted away from that difficult period and toward a brighter tomorrow by sharing much of her vision for the company at a conference for investors and financial analysts at GM’s proving grounds in metro Detroit. In the presentation, Barra outlined a way forward that counts on a steady stream of new cutting-edge, technology-packed models to drive sales growth and profitability in the United States and China over the next four years in an effort to make GM the world’s “most valued” automaker by early in the next decade.

“Our strategic plan is a pathway to earn customers for life and create significant shareholder value in the process,” Barra said in a news release. “Every chance to connect with the customer is an opportunity to build a stronger relationship.”

In her presentation, for example, Barra projected that the portion of GM sales volume that would come from new or “refreshed” products would reach 47% by 2019 compared with just 27% next year. And, to use industry parlance, there is nothing that consumers like better—or that moves the needle on automobile sales for any brand—than “new sheetmetal.”

GM also plans to continue the industry’s largest deployment of 4G LTE high-speed mobile broadband and to take a leap forward in “lightweighting” its vehicles with more aluminum and other measures, Barra said.

Importantly, for a company that has yet to put all of its baggage from the 2009 government bailout in its rear-view mirror, Barra also told attendees that GM would deliver significantly better profit margins on some of the high-volume launches she mentioned as it improves relationships with suppliers, drives more global volume with fewer vehicle architectures and takes other cost-saving steps. As a result, she was able to reaffirm mid-range GM financial targets that include achievement of EBIT-adjusted margins of 10% in 2016 in the United States.

Significantly, Barra also pledged to make GM the “most valued” auto company, rather than just achieve the highest sales volumes. That sounded similar to a pledge made by Volkswagen AG management a few years ago, meant to recognize that true global industry leadership must be more than a function of just which company sells the most vehicles. In her new positioning of GM for the way forward, Barra also has recognized that her leadership of General Motors must quickly move beyond the mostly capable job she has done in steering GM through the recall crisis of 2014.

Additional reading:
Mary Barra’s Strategic Plan