: CEO Dan Akerson -- A threat to GM's recovery?

01-23-11, 09:58 PM
I'll quote the significant parts of the commentary:



January 26, 2011

The looming train wreck at General Motors.

By Peter M. De Lorenzo

(Posted 1/21, 5:30 p.m.) Detroit. After upending GM’s product development function by punting former Chief Tom Stephens up and out of the way to the new title of Chief Technical Officer and promoting Mary Barra as the new head of GM’s product development function, it’s clear to me that GM CEO Dan Akerson is hell-bent on “re-imagining” GM in his own image, even though that image has disaster written all over it.

Marching to the dulcet tones of a soundtrack based on his own unimpeachable convictions - even though they are unencumbered with any real depth of knowledge or understanding of what this business of making cars is really all about – “Lt. Dan” Akerson has launched an offensive to put his stamp on the company, no matter what the cost. And I predict those costs will be cataclysmic for GM and may just cripple the company down the road, just when it needs to be firing on all cylinders.

If this is a business about product cadence – which it most definitely is – then the “new” General Motors is on a runaway train to Hell. After all, this is a guy who has proudly admitted “I’m not a car guy” from the get-go, underlining that statement by making some plainly horrific comments to the Wall Street Journal in a revealing interview conducted right before the Detroit Auto Show.

Do you want to know just how dangerous this guy is to the future stability of GM? In that interview Akerson insisted that GM has too many engines globally, and he’s going to “fix” that. Uh, and he’s basing that on what, exactly? Secondly, Akerson is quite certain that GM is spending too much time and money differentiating sheet metal between the divisional nameplates, when a little creative marketing would suffice.

Oh really?

The last guy who believed that at GM was John Smale and we all know how that turned out, don’t we? The Smale “Reign of Terror” (executed by his Chief Acolyte, Ron Zarrella) was so mind-numbingly wrong-headed that it ended up unleashing a string of products bristling with all of the P&G-infused, marketing-driven mumbo jumbo that the Smale/Zarrella brain trust could muster - revolving around the fundamental premise of it doesn’t matter how good the product is, because brilliant marketing can overcome anything - and resulting in the most woefully uncompetitive and out-of-touch products in the market. Not only was it a complete disaster, it ultimately helped set the table for the most humiliating corporate bankruptcy in American history.

How is the Smale/Zarrella “Reign of Terror” any different from “Lt. Dan’s” vision for the future of GM? Let’s review, shall we?

Let’s see, carpetbagging interloper plucked from corporate obscurity by a flat-out incompetent board of directors and then handed the keys to the candy store just for showing up that day? Check.

Instant "expert" who has studied the business for oh, about ten minutes, and who now boasts as to how he will set the industry straight and show everyone how it should be done? Check.

Talking “customer-focused” decision making while putting product development on a cost-cutting binge that takes precedence over everything else, because after all, we’ll fix it in marketing, right? Check.

Guess what? I’ve seen this movie before and it doesn’t end well. The only difference between GM then and GM now is that this is a company that has only recently emerged from the Abyss of bankruptcy, one that can ill-afford a single misstep brought upon by misguided leadership, even though it has the most competitive lineup it has had in decades. And make no mistake: Dan Akerson’s “leadership” is at the very least misguided.

How misguided? The provocative statements Akerson has made to the press - implying that he has ordered the product development troops to cut $10,000 worth of cost out of the Volt, for instance - don’t even come close to the bone-headed orders he regularly fires off behind closed doors.

And the personnel changes GM has announced this week? They’re emblematic of the intense turmoil going on within the company stemming from the fact that Akerson is wreaking havoc on product development, something he doesn't have a feel for or the qualifications to do, to put it charitably.

The True Believers in GM Product Development have chafed under the barrage of nonsensical orders and pronouncements emanating from Akerson by the minute, and they have pushed back, hard. And one thing you don’t do to “Lt. Dan” is push back, because if you do, you’re either moved or exited from the company.

And after reading all of the gushing media coverage this week giving Akerson credit for being an “enlightened” leader as if he’s some altruistic Big Daddy for promoting a woman to a top position in this business – and there are thousands upon thousands of superbly talented women in this business who are often overlooked, a reality that remains a glaring and historically documented failure of this industry – I’m going to have to throw an ice cold pitcher of water on the proceedings.

By all accounts Mary Barra is an exceedingly bright woman who is an excellent manager but make no mistake, Ms. Barra didn’t get her new assignment because she’s the most qualified individual for the position. No, Mary Barra got her job because “Lt. Dan” needed someone in that position who would do his bidding, and who will bow to his wishes and execute his “plan,” as convoluted, misguided, reactionary and wrong-headed as it may be.

Because the True Believers in Product Development weren’t buying what he was selling. And they weren’t buying his unmitigated bullshit calls or his inability to grasp even a shred of the reality needed when it comes to the business of designing, engineering and building automobiles. In other words, true product people can smell an instant automotive “expert” when they see one.

And Akerson isn’t just setting a new standard for instant “experts” in this business – a rogue’s gallery chock-full of executives who left a trail of tears and destruction at various times throughout this industry’s history, by the way - he’s writing an entire new chapter right before our eyes.

The most glaring thing that Akerson fails to understand about this business? He thinks that the product development function is a process that is solely controlled by cost, when in fact product development is an ever-changing kaleidoscope of technology utilization, engineering philosophy, product vision, cadence and cost, with a large measure of gut feeling and passion thrown into the mix. And that last part, the “gut feeling and passion” part? That is quite simply the Black Art of this business, the very essence of which - if orchestrated properly - separates the outstanding product executions from the merely good or mediocre ones.

But when you’re Dan Akerson and you don’t have even a rudimentary understanding of what this business is all about, and you have difficulty grasping the “gut feeling and passion” part, then putting in a manager to speed the product development “process” along makes perfect sense.

Add to all of this the fact that Akerson conducts himself as if he’s on a search-and-destroy mission, with his bull-in-the-china-shop management “style” routinely lacking even a whiff of subtlety and nuance, and you have a recipe for disaster.

Now, I know some of my esteemed colleagues in the media and the blogosphere have bought the spin generated by GM’s PR troops on Akerson’s moves hook, line and sinker, regurgitating such pre-packaged pap as, “Visionary moves by GM’s CEO,” “Akerson puts his stamp on a new, tech-savvy, customer-focused GM,” and “Akerson promotes diversity in the new GM,” etc., but the real story has none of that sheen or carefully orchestrated gloss.

No, the real story is that “Lt. Dan” is an egomaniacal corporate opportunist with an overwrought sense of himself, one who will shake the neck of GM until it falls limp in his hands so that he can then rebuild it in his image. And believe me that image is not pretty. It’s not one of a customer-focused, enlightened, tech-savvy automotive company of the future, by any means. Instead, it will be a company stripped to the bone in the interest of delivering short-term eyeball-popping profits for the next couple of years, but which will then be left a woefully uncompetitive hollowed out husk of a company by 2016 because of a product development “process” decimated by functionaries imbued with the Akerson gospel of speed and cost cutting - product relevancy and integrity be damned.

So please spare me the hyperbole associated with Dan Akerson and how he is the latest in the long line of saviors for General Motors. “Lt. Dan” is a corporate blunderbuss masquerading as a “switched-on” visionary auto executive, except there’s nothing visionary about the shallow reservoir of knowledge that this guy brings to the table every day. Instead, it just falls under the time-honored dictum of a little bit of knowledge is a very dangerous thing.

The Bottom Line?

Dan Akerson is the wrong guy, at the wrong time, at the wrong car company.

And as long as he’s at the wheel, GM’s long-term future is at risk.

That’s the High-Octane Truth for this week.

Its a very familiar story.

01-23-11, 10:21 PM
Oh shit, we're ****ed.

Time to buy stock in Ford.

01-23-11, 10:48 PM
I'd rather have this Dan...


01-24-11, 02:07 AM
I really do hope this guy is wrong, but I fear he's all too right.

01-24-11, 06:36 AM
Thanks for posting Peter's article, but to those reading this post, do yourself a favor and read all and not just the highlighted JESDA 'cliff notes', you'll get the whole 'feel' of the treatise. But one thing is pretty clear and that is that Dan Akerman can be very dangerous for GM's recovery; it's not quite time to panic yet, but what is getting GM out of their predicament (good product) may just be in jeopardy if this clown is allowed to pillage the company.

01-24-11, 10:22 AM
Sounds on par for Gov't Motors...

01-24-11, 11:51 AM
He'll be thrown out in 6 months....


01-24-11, 11:57 AM
I'm sure this guy will inspire a lot of shareholder confidence!

01-24-11, 12:47 PM
At this rate, I have a pretty decent chance of becoming CEO. I'm probably near the bottom of the stack of resumes, but I suspect they'll get there within a year.

When Chrysler lost car guys like Lutz (after being squeezed out by Eaton), their product suffered. Now that Lutz is out at GM, I see they're up to the same bag of tricks.

01-24-11, 11:24 PM
Well we all know it. CEO's who are car guys usually bring fun and innovative products to the table. Lutz brought the Viper to birth for Chrysler and he did a lot of great stuff for GM too. Penny pinchers like Akerson bring brand engineering and water down the brands. Anyone remember that biblical cluster**** Roger Smith and his narrow minded ideas.

01-25-11, 05:42 PM
I cant think of a single brand that succeeded based on manufacturing efficiency. This is a benefit the public never sees. Important yes, but not the most important aspect. The most important aspect of the automotive industry is, surprise surprise, the actual product. A good product will sell well, and a product that seems like its been filtered through an accountants office will fall at the feet of the superior product. No amount of advertising can change that.

01-25-11, 06:25 PM
A "good" product is a loose and subjective term. You can't make everyone happy. Dedicate yourself to chasing the theoretical perfect product that cannot exist and you'll run yourself under in the process. "The secret to failure is trying to please everybody."

Besides, it's not wise to try to pinpoint, focus on, and isolate a single most important and single least important aspect of a business. You end up sacrificing something in doing so. There's the principal of displacement to consider.

The assumption that the best product automatically spells success, regardless of "accountant filtering", is absolutely FALSE. The above mentioned Viper is/was well regarded, the Chrysler minivans were revolutionary (and arguably the best at what they did), the k-cars were regarded as good reliable vehicles, and the Neon platform has sold millions, yet Chrysler has been on the verge of financial ruin for DECADES, including the years under Lutz's reign. If it wasn't for the government (military) contracts, who knows where Chrysler would have ended up in the past.

There are also countless examples outside of the automotive industry, from farm tractors(especially) to home electronics.

01-25-11, 06:54 PM
Chrysler's most efficient AND most profitable years were under the product direction of Lutz alongside leaders in multiple departments who understood the need for the company to innovate and differentiate itself. The company was making money hand over fist but had no idea where to go -- thus the reason CEO Bob Eaton looked to global partners for expansion, thus the reason Daimler Benz drooled over Chrysler's cash reserves. Unfortunately, what was supposed to be a partnership ended up being a disastrous sale to a foreign entity.

The only reason Bob Lutz didn't become CEO of Chrysler is because of disagreements he had with Iacocca. Iacocca later admitted his mistake in selecting Bob Eaton as his favored successor. Eaton had disagreements with Lutz as well, and made certain that Lutz would have no role at Chrysler after Daimler Benz acquired the company. This was despite Lutz being the ONLY top-level manager at Chrysler who spoke German -- Schrempp and other Daimler executives were shocked to learn that Lutz, someone who they believed played a significant role in Chrysler's revival and could play a pivotal role in merging the two companies, would be leaving. Lutz was also the only executive at Chrysler who had direct experience as head of European operations (Ford, BMW).

Back to GM...
The issue is, in part, a lack of vision. Combine a lack of vision with a massive bureaucracy and you end up with a slow-moving ship with no place to go.

LIM gaskets, Northstar, 3.6 timing chains, piston slap, and other quality issues stemmed from complacency among people at GM who didn't want to rock the boat. If you don't blame anyone, no one blames you, and in the short run your job and career are safe. At Chrysler, vehicles were developed by teams that worked simultaneously, ensuring shared interest. At GM, a vehicle traditionally began as a designer's concept or vision and was heavily diluted as it passed through each department on the way to becoming a final good. What starts out as a brilliant idea winds up being a badge-engineered half-hearted heap of car. That's how you end up with trash like the Grand Am -- passionless garbage.

What's worse, GM's niggling cost-consciousness STILL resulted in unprofitable vehicles. W-bodys in the late 80s and early 90s sold at a $2000 per unit loss! Imagine that -- cars that were undesirable, poorly made, AND unprofitable all at once. Its why in 1992 GM was on the verge of bankruptcy.

Akerson is treated by the mass media as GM's savior. I'm justifiably skeptical.

There's also a lot of Bobs in the auto industry.

01-25-11, 09:37 PM
There's also a lot of Bobs in the auto industry.

That there are, I'd agree with you. Unfortunately the number of Bobs who are in a position to overrule/block the beancounters is very small...

Lord Cadillac
01-25-11, 11:07 PM
Since I don't have time to read the whole article - can somebody post bullets for what's GOOD about Dan Akerson?

01-25-11, 11:19 PM
~He'll make GM show a profit, short term.

01-25-11, 11:40 PM
He has a decent record in the telecom industry. The problem is, you aren't really creating final goods in telecommunications. Telecom products are often differentiated by marketing and branding and artificial tiers rather than physical or tangible differences.

01-25-11, 11:48 PM
It's disheartening to read that article considering I just stopped at the Chevy lot here in town yesterday. I was drooling over a Synergy Green 2011 Camaro SS and was impressed by the new Cruz. So much for that.

01-26-11, 05:13 PM

According to the Feb 2011 Motor Trend article on power players in the auto industry I've been reading, the guy above, Mark Reuss, is a true "car guy" and a rare GM lifer. He's currently GMs vice president and president of NA operations and in his section's "outlook" prognosis it says amusingly... "Dan Akerson's heir apparent".

By the way, Mark is rated number 6, while his boss brings up the rear at... 27.

Maybe there's some hope after all.

The Tony Show
01-26-11, 05:28 PM
I know next to nothing definitive about Akerson, and based on his wording I'd wager the author's "knowledge" is based mostly on hearsay and assumption. One thing I DO know however, is that Alan Mulally isn't a car guy and Ford has done marvelous under him. One of his first acts as the head of Ford was telling a reporter that his Lexus LS460 was the best car on the planet. :doh:

It's true that being financially solid while selling garbage cars would lead to failure, but so will building great cars under reckless financial operations. At the time it all came crashing down on GM, their portfolio was stronger than it had been in 50 years. The Camaro, Corvette, CTS-V, Malibu, G8, Equinox, Solstice/Sky and several others were some of the best reviewed GM products in years, but nothing was going to stop the bleeding caused by 30 years of reckless financial decisions up top.

At this point GM has a strong product line AND a clean balance sheet, and it needs both cars guys AND bean counters to work in harmony to keep both. If Akerson can do like Mulally and combine his business acumen with the car savvy of those working under him, GM can be very prosperous in the long term.

01-26-11, 05:45 PM
^ We can only hope that turns out to be the case.

01-26-11, 05:46 PM
Let's talk about Mullaly for a moment...

I knew someone was going to bring him up in this discussion and a couple of things come to mind as to why I avoided going there... Even if he's not a car guy by definition, he's an extremely creative individual who enjoys being intricately involved in the day to day operations of his company. This is why he did so well at Boeing.

However, I'm not entirely convinced that he is going be the picture of long term success either. He made Ford profitable by getting rid of a slew of divisions, and he lucked out that he had that low hanging fruit to start with. Obviously, if you're broke and you sell all the furniture in your house, you'll certainly have money, but you also won't have a place to sit. Fortunately these weren't core brands, but Land Rover at least was profitable (and Jaguar likely as well) and now Ford has no halo division or brand whatsoever, something even Chrysler's Marchionne thought critical to retain with the Viper brand.

Next, I'm already spying overuse of the Taurus platform, the same kind of badge engineering that gets these guys in trouble to begin with. We now have the Ford Taurus, Ford Flex, Lincoln MKT, Lincoln MKS and now even the all new Explorer running on this same platform. Meanwhile the Edge, MKX, Fusion, MKZ, and Milan all ride atop the old Mazda6 architecture. There is starting to be dangerous little variation between these products all over again, especially when you consider the Navigator and Expedition are likely headed for the chopping block, and the TC is already gone.

Mullaly is the darling of the automotive industry and everything is rainbows and lollipops at Ford right now, but I'm one of the few people who senses danger on the horizon if this lack of differentiation keeps up. So despite the creativity that got Mullaly this far, his lack of "car guy" cajones could signal possible trouble later on. This is the reason I thought twice before bringing up Mullaly as a counterpoint to Akerson.

01-26-11, 06:19 PM
Mulally comes from a background of heavy manufacturing. He understands how to deal with costs, customer expectations, timing, and environmental threats (outside business environment, not the ozone layer). As for the author, Peter DeLorenzo, he worked for over two decades in the auto industry and wrote two books. You can see him on Autoline. Sometimes hes right, sometimes he's wrong. But at least he's a vocal critic.

Too much of the automotive press gets wrapped up in special invitation parties, Hollywood-style glamour, and false heroism. If you followed the DaimlerChrysler merger, you saw that there was very little criticism or skepticism by the press. DC orchestrated everything and spent MILLIONS on parties (as much as TWO MILLION on one post-merger party!) and had journalists following them around like leashed puppies begging to be part of the magic.

Akerson is a telecom lightweight. He can be successful if he leans on those with more knowledge and experience than he has rather than blazing his way through GM like a "trust me I got this!" arrogant outsider. Or he could just quit.

01-26-11, 07:04 PM
Next, I'm already spying overuse of the Taurus platform...

Old Volvo S80, isn't it?

01-26-11, 07:21 PM
Old Volvo S80, isn't it?

Yes exactly. So it's essentially a rehash of a rehash, albeit a good one.

01-26-11, 07:31 PM
I am afraid I have to agree with both Jesda's and Playdrive"s analysis and comments. Over the past twenty years I've seen so much "duped" press razzamataz and so much "knee jerk" management by highly paid executives who have shown short sighted business acumen which has been ultimately very detrimental to the companies they manage (AT&T is a poster child for this phenomenon).

By the way, what is Hewlett-Packard's board bringing Meg Whitman on board? Yeah, a fired CEO of Ebay and a failed candidate for governor of a state nobody in their right might would want to governor of at them moment! Gees, as if Karly Fiorina wasn't a bad enough faux pas! They must be taking using medical marijuana in the boardrooms of Silicon Valley these days, or they are spending too much time carousing and listening the hearsay analysis of the Fourth Estate!