- Gerard Seijts
- Oct 17, 2018
This article first appeared in Ivey Business Journal.
As head of General Motors, Mary Barra has already made history by simply being the first female CEO of a Detroit-based automaker. But after the company announced an all-electric vision for the future last year, Barra’s ambition as a leader, as stated in a recent Quartz article, is to be remembered for proving a “supercentenarian company can change the world.”
GM, which last year posted record per-share earnings on revenue of US$145.6 billion (before a US$7.3-billion accounting charge pushed the company into a US$3.9 billion net loss), dominated the personal mobility industry for decades when it was fueled by combustion engines. But following a series of management missteps during a period of increasing competition and global financial chaos, the storied company was forced to file the fourth-largest Chapter 11 bankruptcy in U.S. history. Barra joined the company at 18, signing on to inspect Pontiac Grand Prix hoods and fender panels while simply hoping to help pay for college tuition. But in addition to education financing, she landed a lifelong career.
When appointed chief executive in 2014, Barra was tasked with completing the company’s post-bankruptcy recovery while shifting GM’s strategic gears. Shortly after, GM’s restructuring was threatened by a defective ignition switch scandal linked to more than 100 deaths. Under her leadership, the automaker identified the crisis internally and publicly accepted full responsibility, voluntarily recalling 2.6 million vehicles and launching an internal probe that led to cultural and procedural change. Since then, Barra has completed GM’s recovery by cutting unprofitable ventures and focusing on the American and Chinese markets. Under her watch, as Business Insider noted earlier this year, “GM has started a ride-sharing service (Maven), bought a self-driving start-up (Cruise Automation), invested in Lyft, donated to non-profits that promote STEM education for women, and beat Tesla to the affordable electric car market with the Chevy Bolt. Now, the company is testing its fourth generation of autonomous driving technology (most companies haven’t passed their first), posting consistent quarterly profits, and building up a sizable balance sheet.”
Barra – whose Twitter bio includes “Engineer, STEM education supporter, Camaro enthusiast” – recently sat down with Ivey Business School Professor Gerard Seijts to discuss leading a company with over 100 years of history that is out to redefine personal mobility in a market facing unprecedented innovation and technological change.
Gerard Seijts: Disruption isn’t something new to auto-sector players like General Motors, which has been under pressure to shorten product development cycles for years. How do you create a culture of innovation in a company founded in 1908 while also ensuring profitability?
Mary Barra: If you think about the amount of software that is in a car today versus 10 years ago, the difference is in many orders of magnitude, and mechanical validation is very different than software validation. With mechanical validation, you repeat functions over and over again to see where things fail. With software, you can go faster, but problems are not always visible. Either way, validation of safety-critical systems – steering, braking – must be highly controlled and locked down. You can’t just make little code tweaks and see how it works out. When safety is not an issue, the design concept of minimum viable product can make sense, so things like infotainment systems can have fast development cycles. As a result, our systems of testing and validation, even creation, had to be redesigned to account for these differences. We’ve really changed our vehicle development process to enable quick-turn innovations, where warranted, while maintaining respect for the right level of validation for mission-critical safety systems. Some of the learning was a little hard. We had to bring in people from outside our industry, because people who have spent careers working old-school vehicle development sometimes find it hard to go the minimal viable product route, where upgrading replaces designing for perfection out of the gate. Our new people and existing employees then had to learn to value each other’s perspectives. It’s worked out quite well, but it was hard rowing for a while.
GS: What made it hard rowing? Was it the different languages, cultures, and vantage points?
MB: Exactly. I don’t think either group appreciated the work of the other until they saw how it created value. After that, barriers broke down and collaboration took off.
GS: Cross-collaboration has been a main theme in Ivey Business School conversations with executives. It is one of the hardest things to do well. Any advice for companies just getting started?
MB: Work hard at it from a cultural perspective. Make people understand it’s not about functional areas, it’s about creating a common culture that is willing to find internal trade-offs in the best interest of the whole enterprise and its customers. It’s about thinking win/win, not win/lose.
GS: What have you learned about creating this enterprise mindset?
MB: One of the more powerful things that we did was create Operational Excellence programs, which were designed for Six Sigma and other well-defined problem-solving tools. The Op-Ex philosophy was “everything can be made better.” Whenever you start initiatives like this, some people really get it, but you’ve got to pull others along. That requires really good leadership support. Too often, leadership teams want their organizations to change, but don’t feel they have the time to do the required work. At GM, my whole leadership team became Six Sigma green belts. It was a robust University of Michigan process with something like 16 modules, but we all got our green belts and started to drive the program forward. Early on, we also picked some of our highest-potential people to participate, which had side benefits. After people got new tools that enabled better problem solving, Op-Ex projects quickly became the way to solve cross-functional issues because they were being reported on and championed by leadership. Everybody started asking for help to address their issues, even when they didn’t technically need a Six Sigma approach. When asked to help by others, everybody said, “I’m there.” That was an a-ha moment for me. People were being motivated to the table far more than ever before. Another thing leadership did was examine behaviours that put us at our best. We’ve learned that just trusting everybody to do their roles on group projects isn’t enough. You need to take things a step lower and allow people to voice the individual challenges they face completing their roles. Really allowing all concerned to talk to the whole group about their concerns and conflicts delivers a level of alignment and clarity that drives collaborative projects to go much smoother and faster.
GS: What other enablers for driving cross-functional collaboration come to mind?
MB: Explaining the “why.” To really work together well, people need more than clear directives and group alignment. They need to understand why projects matter. As a company, GM is great in a crisis. So, when examining behaviours, we asked: “Why are we great in a crisis?” In crisis mode, people in our company are more than just aligned. They share an understanding of why something must be done. That made us realize that knowing the “why” really gets people motivated and engaged. It makes them want to win. We saw this a few years back when the tsunami hit Japan and disrupted the supply chain. Suddenly, we had to figure out how to keep building cars with some suppliers not shipping parts. And we had to do it in a way that’s safe with validated parts. We put together a cross-functional team, including folks from engineering, purchasing, and manufacturing. They all got together, working around the clock in a room together. And they exceeded expectations because everybody instantly knew what had to be done and why it was important to the whole enterprise. If they couldn’t solve the issues, we couldn’t build cars. That understanding of mission is critical to cross-functional team performance.
GS: How did leadership support the crisis team in this situation?
MB: Management trusted and empowered them, then left them alone. We didn’t ask for reports every five minutes. I was running product development at the time, and I recall going to see the team simply to say, “What do you need?” We also tried to anticipate their needs. When we realized they were working around the clock, we started bringing in food. And this was summer, and that room full of people got hot, so we brought in fans. Sometimes it’s the little things!
GS: What do you say to people who think this sounds more like parenthood than leadership?
MB: I’d say they are wrong. In addition to truly being able to listen, showing empathy and vulnerability while making sure you are approachable really makes a difference. People don’t care what you know until they know that you care. I don’t recall where I first heard that phrase, but I believe it. Leaders need to understand everybody wants to do a good job. But if you create an environment where they don’t feel valued, they will stop caring. And when I talk about listening, I mean listening to understand someone else’s perspective, not listening to try to get someone else to see your point of view. I’ve had my team trained in empathetic listening because it is one of the core behaviours we want everyone at GM to live every day. Good ideas can come from anywhere. At GM, we crowdsource solutions internally with an open software platform called “tackle.” We also seek creative ideas via our version of Shark Tank, which we call SYNAPSE. Instead of pitching investors, employees pitch leaders to champion their innovations or problem solutions. This is cross-functional and level-less, and people love it.
GS: OK, so that’s how you’ve dealt with meeting past challenges. Let’s look at the present and future. What are the major emerging disruptions currently on your radar?
MB: Well, numerous emerging technologies are obviously impacting every industry, not to mention people’s lives. But one of the most significant for General Motors is autonomous vehicles. We have invested significantly in this area because it represents a huge opportunity to provide more value to customers in multiple ways. Think about safety. In the United States alone, roughly 40,000 people lost their lives in traffic fatalities last year, and more than 90 per cent of these tragic incidents were caused by human error. So self-driving vehicles clearly have the potential to provide a much safer transport from point A to point B because they follow traffic laws and are not driven by distracted, drowsy, or impaired individuals. But the positive impact of this technology goes well beyond safety. Think about how much urban space is used for parking in Toronto or New York City or London. And as things stand, it’s not enough. But autonomous vehicles open the door to better space utilization and less traffic congestion, saving us all valuable time while improving how cities come together. That’s an example of technological change. On the social front, I think the next generation, broadly speaking at least, will be much more intense and purpose-driven, with a stronger sense of wanting to give back and make the world a better place. As consumers, they will support companies that help move the world forward. As employees, they will want to work for companies that line up with their values. I see this intensity today. When we rolled out GM’s vision of “Zero Crashes, Zero Emissions, Zero Congestion,” I was flooded with e-mails from excited employees saying how proud they were to work for a company with this vision. I don’t think previous generations didn’t care about the world or lacked purpose – I just see increased intensity today.
GS: Is GM’s vision an ideal or real goal?
MB: At General Motors, we believe in the science of global warming, so reducing emissions isn’t just smart business to us. Electric vehicles or hydrogen fuel cell vehicle technology will eventually get us to zero vehicle emissions. And when dense traffic environments only have autonomous vehicles surrounded by supporting infrastructure such as sensors, cameras, and radar, I think the industry will be able to deliver zero crashes and zero congestion.
GS: What are you reading to help you lead in the Age of Disruption?
MB: I’m guilty of reading books in bits and pieces, but I am known to travel with a lot of them. One book I’ve been reading recently is Creative Confidence. Co-authored by David Kelley, founder of the design company IDEO, and his brother Tom, author of The Art of Innovation, the book uses design thinking to identify strategies that can help us tap creativity to improve how we innovate and solve problems. I am very interested in this area because at GM we now teach design thinking to senior and mid-level executives to help them better understand customers and their needs. Emerging technologies clearly can help us eliminate customer frustrations, but to really use technology to exceed customer expectations, you first must truly understand their needs and pain points.
GS: What industry innovation has surprised you the most in recent years?
MB: It may sound surprising, but I’d have to say autonomous driving. We have been involved in this area for a long time, but we were initially on what I’d call an evolutionary path, one that focused on safety features such as adaptive cruise control and automatic emergency braking. We are now also on a revolutionary path heading toward driverless vehicles. How fast things changed over the past few years came as a bit of a surprise, but how fast GM has made progress has made it a pleasant surprise.
GS: How did the company maintain momentum while shifting gears?
MB: I think two things contributed to keeping us on track. First, when we saw the revolution coming, we didn’t even consider stopping work on the evolution. In other words, we didn’t waste any time debating where to focus our energy. We just said, “Let’s do both.” We saw it as a creative opportunity. Doing both together enabled us to go fast. Second, we looked at working on the revolutionary path in three different ways: doing it in-house, partnering, or buying an existing start-up. We decided on the latter and bought Cruise Automation in 2015. I think that decision helped us progress quickly.
GS: What do you consider the most ignored risk related to the forces of change currently faced by your industry? Perhaps about the global economy in general?
MB: I don’t think people are ignoring the impact emerging technologies will have on jobs and how people work, but I think a multi-faceted solution still needs to be developed because individuals, like companies, need to be prepared to face disruption. This is a significant issue. Autonomous driving, for example, has the potential to disrupt industries involved in moving goods or people, and there are many people employed by these industries today. My father was a die maker for 39 years. Technology changed some things over the course of his career, but his craft of making a die to form sheet metal parts remained primarily the same. Today, people coming out of any education level can’t land a job and assume: “I’m going to do this for the rest of my life.” They need to be ready to re-create careers – two, three, maybe four times. In other words, they need to understand learning doesn’t end with graduation.
GS: How do we make people embrace lifelong learning?
MB: I think we need to encourage people to be curious about technological change, at least curious enough to somewhat understand it. As an engineer, I can appreciate technological change. In college, I was in the first class to use a mainframe computer word-processing program as opposed to a typewriter to write my thesis. I can remember when e-mailing documents displaced faxing them. I didn’t develop these advances, but my understanding of technology allowed me to appreciate them. And that’s more important today than ever before. I am not saying everyone has to be a coder. But I am saying people need to be curious enough about technological change to understand what’s changed. I recall attending a conference not too long ago with a Q&A system that allowed questions from audience members to instantly appear onstage. The person introducing the system explained that “some kind of magic happens, and I get the questions up here.” And that troubled me because I believe that the people who understand the basics of technology will have many more opportunities to re-create careers in the Digital Age. As I said before, everybody now needs to be ready to re-create careers – two, three, maybe four times. That’s one of the reasons why I and General Motors are big proponents of STEM education. Retraining can and will play a role in mitigating employment disruptions in the future, but we really need a workforce with a life-long learning mindset that is instilled from kindergarten through high school, trade schools, technical programs, undergrad, even through graduate schools. And I think that’s a huge challenge because we still have many students naively thinking, “I’ll study this and be done.” That attitude, especially when combined with a willingness to see technology as magic, will put some people at a disadvantage to the technically minded in the Digital Age, and I think that’s dangerous.
GS: How are you preparing GM for disruption as an organization?
MB: I don’t believe in fixed organizational structures, because things shift over time and being fluid and agile in how you create is very important. You obviously need some structure, but I remember a wise supervisor once telling me that too many people worry about what the organizational chart looks like when they should be focusing on the white space between the lines, meaning how everybody works together. I have often switched reporting lines just to create new connections. Sometimes just creating a new team that is going to go off and work on something – for a week, or a month, or a year – can make a big difference.
GS: What else do you do as an organization to prepare for disruption?
MB: GM commits to employee development throughout careers, offering a range of programs that help employees improve skills, advance technical understanding, or pursue graduate degrees in business and engineering. We also have a leadership mindset that understands the limitations of top-down management. We know nobody has all the answers, so managers are prepared to learn from others. We do reverse mentoring with people who have worked at the company five years or less that come in and they teach us something about how they look at technology or help us design a new performance management system. Being prepared for disruption is all about realizing great ideas and good answers can come from anywhere, and that everyone has to be constantly learning, no matter where they sit in the organization.
GS: So, in the Age of Disruption, senior leaders need to be humble like never before, right?
MB: Yes. And I think we understand that at GM. I remember one event several years ago very specifically. It was designed to jumpstart senior leadership’s understanding of new technologies. Everyone welcomed the opportunity and it was amazing what was learned going from booth to booth for very efficient presentations. In the course of something like two hours, we gained an understanding of about 20 different new technologies or social media platforms.
GS: The Age of Disruption isn’t just about technological change. You just mentioned social media, and the speed and reach of social media means companies must be prepared to manage crises in consumer confidence – real or imagined – without notice. You know this better than most, since one of your first challenges as CEO of GM was facing the recall and fallout related to defective ignition switches. As a leader, how do you face this sort of challenge?
MB: On the first day of a crisis, you don’t have all the information. So, you simply start by owning it. We put together a small team that was guided by three principles: doing the right thing for customers, being honest and transparent, and doing everything possible to ensure the issue never happens again. Then we communicated, communicated, communicated. We made sure people both internally and externally knew a dedicated group was working on the problem and committed to keeping everybody updated until the issue was resolved. A lot of people think someone outside GM identified the problem behind the ignition switch recall, but we brought it forward and voluntarily announced a recall. A series of mistakes were made over a period of time and they had tragic consequences. It took way too long for us to figure it out, but it was us and we have learned and changed how we address and escalate problems. I now tell employees all the time that when you have a problem that you can’t solve, you must elevate it immediately. The longer a problem exists, the bigger it gets. That’s now a GM mindset. We redesigned major processes within product development, and we implemented almost 200 recommendations from an outside investigation. We did it in a cross-functional way and then conducted an internal audit to make sure nothing was missed. The issues behind the problem were addressed. But we never want to forget what happened. Once a year, we have a week where we discuss what happened and the changes that were made to reinforce our dedication to safety. It is very important to have critical lessons institutionalized.
GS: How did managing this crisis change you?
MB: It made me less patient when I see a need for urgency.
GS: What advice do you have for other leaders who don’t seem comfortable with transparency?
MB: Think about the importance of trust to your business. Trust makes brands, especially today when information isn’t always well rounded and misinformation flows everywhere. So, if you want to have a trusting relationship with your customer and your workforce, you’ve got to be transparent. And being transparent requires admitting mistakes. Generally speaking, people respect people who own mistakes because everyone is human, and humans make mistakes. Once you are willing to own mistakes as a leader, you can focus on fixing them and making sure they never happen again.
GS: What role should business school play in preparing leaders to face the coming waves of disruptions?
MB: Future leaders need to really understand why success is not just about the bottom line. I went to business school in 1988, and I graduated in 1990. And when you think about what people in the 80s generally saw as the purpose of big business, you realize how much positive movement has taken place in terms of broader corporate responsibility. So, while teaching future leaders how to maintain agility, ethics, integrity, transparency, and willingness to listen while under pressure might sound basic, it is still extremely important to produce leaders who will do the right thing for the greater good – which is what investors and consumers now expect.
GS: What big questions would you like business scholars to investigate?
MB: The whole notion of long-termism versus short-termism. We really need everybody to understand, especially when looking at technology and deeper investment, the long game when it comes to creating value and serving the best interests of all concerned. I’m not saying quarterly results aren’t important, but leaders shouldn’t be pressured into ignoring the longer-term view. That is one of the things I will not do. Fuel cell technology still needs work, but its potential to change the world for the better is real, which is why this company has been investing in this area for probably 20 years. Leaders have to invest in the long term, not just focus on areas that they can monetize super quickly.