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Whitacre Will Change GM, But Will He Bring Better Results?

Edward Whitacre
Edward Whitacre

Ed Whitacre is now fully in charge of General Motors and for better or worse he will change the automaker.

The real question is whether his moves will be successful?

That's the risk with pushing out Fritz Henderson.

Whitacre and the GM board clearly believe the company needs to move faster and try different approaches. I can't argue with that philosophy. As a company GM was stuck in its ways and suffered from years of trying the same thing over and over.

If Henderson finds another Alan Mulally, this move is the right one. But if he fails to find the right person, or persons for other key management positions (CFO and head of Opel), then GM could be headed for a very rocky era where there's lots of change but little progress. It's a very real risk.

In the last 8 months, GM has lost a ton of institutional knowledge and leadership. Yes, you can argue there's nothing wrong with losing institutional knowledge if the institution is broken-as GM clearly was last spring heading into bankruptcy. At the same time, the people who have left GM in the last two months (Henderson, Opel CEO Carl-Peter Forster, former VP of sales Mark LaNeve) have left GM with a lot of holes to fill.

Filling one major leadership hole in any company is a big deal, but trying to fill several in short-order (while also trying to stem losses, restructure a European subsidiary, and get ready for an IPO) is a Herculean task. On top of that GM has to make sure it doesn't lose focus when it comes to running the day-to-day business. Given all of that, it's easy to see why Ed Whitacre faces long odds.

So was Whitacre wrong to make this move at this time?

No.

GM is a company that still needs a major re-alignment.

Whitacre and the board know that. And you can bet that whoever is hired as a permanent CEO will make mistakes as they try to turn around the company. But with GM still losing money and it's future still in doubt, Ed Whitacre believes he has to step up the changes if GM is to survive.

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