By December 6, 2009 4 Comments Read More →

Will Changing the CEO Help GM?

I don’t mean to kick Fritz Henderson while he’s down, after he resigned as CEO of Government Motors this week.

He resigned on Tuesday and I didn’t even learn about it until Thursday, as I was under a proverbial rock, busy teaching a workshop those two days. In my briefest of news scans, I guess he didn’t knock the White House party crashers off the top of the news, but that’s a different sad story.

The WSJ had a good article talking about how changing the CEO alone rarely has the impact people think.

The Intelligent Investor: Why Changing the CEO May Not Change the Company – WSJ.com

If you took the CEOs with the best track records and brought them in to run the businesses with the worst performance, how often would those companies become more profitable? According to economist Antoinette Schoar of Massachusetts Institute of Technology’s Sloan School of Management, who has studied the effects of hundreds of management changes, the answer is roughly 60%. That isn’t much better than the flip of a coin.

“Some people,” Prof. Schoar says, “may have this almost blind belief that the manager at the top changes everything. Our results show that managers do matter, but they don’t change everything.”

I wasn’t a fan of Rick Wagoner and I didn’t think Henderson was a great change agent or figurehead that screamed “change.” Maybe I was putting too much stock in him as one man. What about the overall culture and systems of an organization? Can one man fix all of that? Is Steve Jobs, as “CEO of the Decade” a uniquely heroic force of nature or is that perception wrong as well at Apple?

I’m certainly not a fan of the new guy, former AT&T CEO Ed Whitacre. AT&T isn’t known for being a real customer-focused company, so what positive traits will Whitacre bring to the mix? His TV ads for GM, of the “ego ad” genre, (see Sprint’s Dan Hesse for another bad example) proved little more than his ability to walk and talk at the same time. He’s no Lee Iacocca (his 1984 ad here – makes for an interesting side-by-side comparison of content and style).

Whitacre knows nothing (his admission) about the auto industry, is this a plus? It may have proved helpful for Alan Mulally moving from Boeing to Ford, but what of this case?

If any organization is struggling, including a hospital, is changing the CEO a pancea or silver bullet? The research would suggest it’s nowhere close to being a cure all. What have you seen?

What do you think of Fritz being forced out? Will this be a positive tipping point for GM or are they just headed for more of the same? Will Toyota’s new CEO be more effective at bringing needed change to that organization, given their recent quality problems?


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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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4 Comments on "Will Changing the CEO Help GM?"

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  1. Karen Wilhelm says:

    What I heard from a Toyota insider at the October AME conference is that Akio Toyoda has been deeply concerned both about quality problems and the way Toyota had expanded well beyond its ability to inculcate managers into the Toyota Way. Mr. Watanabe was treated with all respect and is now in a position where his experience and knowledge are more useful.Besides changing CEOs, Toyota has changed over most of its other top executives. Is that so different from what other companies do then they change leaders? Not really, except for Akio Toyoda's feelings of family responsibility for the company. I doubt that replacing Henderson with another guy from a typically American style CEO will affect the culture at all. Mulally was a better bet, and has done some interesting things, but it will take a long time for the lean culture in the plants to penetrate the layers of clay above and around them no matter who's at the top.

  2. curiouscat says:

    Nope. GM can certainly be fixed but it isn't going to be, just because of a CEO. In 2005 I wrote could Toyota fix GM? Yes. http://management.curiouscatblog.net/2005/07/10/could-toyota-fix-gm/ but why would they want to – much easier just to grow themselves. http://management.curiouscatblog.net/2009/02/25/nummi-and-gms-failure-to-manage-effectively/ many different CEOs failed.I have a post coming up next weeks on the overemphasis on CEOs. They matter but not as much as the rest of the organization.

  3. Jamie Flinchbaugh says:

    I think things just got worse for GM. I'm not a big Fritz fan, but Whitacre acts like he's the man. He doesn't really have a great track record, for culture, customer, or cars – the current focus areas for GM. I think fundamentally Whitacre didn't want to let Fritz run it. Fritz figured that out, so he left. Difference between Mulally and Whitacre – proven leadership. Jamie F

  4. Steve Harper says:

    To quote Built to Last: "At visionary companies, only 4% of CEOs came from the outside." These swapouts seem desparate and ill-conceived. Where is the vision in these choices? This is very sad to watch. If you see the kitchen sink appointed CEO of GM you'll know what's coming next.

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