Originally appeared in The New York Times.
For me, portions of the report of the investigation into General Motors’ safety problems with certain cars were a journey down memory lane:
The empty gestures known as the “G.M. nod” and the “G.M. salute.” The reluctance to deliver bad news up the management chain. The overreliance on superficial PowerPoint presentations. The lack of communication among different slices of an overstuffed bureaucracy.
Those were just some of the many startling – and troubling – phenomena that the team I headed as President Obama’s lead auto adviser found when we began meeting with senior G.M. executives in early 2009 in order to provide the president with an action plan for how to save the nation’s largest automaker.
We all knew going in that the giant automaker was in bad shape. But nonetheless, looking under the hood of G.M. was the most stunningly disappointing dissection of a paid-up member of corporate America in my 30-year Wall Street career.
Having such a dysfunctional culture had direct and disastrous consequences for the quality of decision-making, perhaps most notably the way the company had careened off a financial cliff, refusing to acknowledge its woes until a government bailout was its only recourse.
Emblematic of the company’s lack of management accountability was the insistence of its chief executive officer, G. Richard Wagoner Jr., that its problems were all the fault of external forces: its unions, oil prices, the credit crisis and competition from Japanese imports.
Yet its archrival, Ford, facing that very same list of challenges, avoided bankruptcy and a government handout.
How? In large part because Ford’s chairman, William Ford, decided in 2006 to bring in an outsider, Alan Mulally, from Boeing to overhaul the company. Mr. Mulally brought enormous energy, laserlike focus and a style that, critically, encouraged open and candid communication within the executive team.
For example, during a management meeting soon after he arrived, Mr. Mulally was given a disappointing report: The introduction of a line of new vehicles had been delayed by technical problems.
His response was to clap, a clear signal that executives would be respected rather than punished for delivering bad news.
At the other extreme, soon after I arrived at Treasury, I saw firsthand G.M.’s problems when it proposed injecting yet more capital into one of its far-flung, loss-making subsidiaries, without any analysis of why the additional investment made sense.
It was just more of the get-along, go-along G.M. way of shoving money at a problem in the hope that it would go away.
The key lesson from these two iconic Detroit companies: management matters. Even a single individual at the top of a behemoth.
To be clear, I’m positive that none of the many G.M. executives we interacted with would have ever wanted to put an occupant of one of the company’s vehicles in harm’s way. In fact, since 2004, G.M. has recalled more cars than any other manufacturer.
Nor do I question the finding that uppermost management was unaware of the problem. Certainly, none of us on the president’s auto task force had the slightest inkling.
But I wasn’t surprised that the special investigator’s report put the company’s culture squarely in the cross hairs of the problems that it targeted.
Unfortunately, its persistent cultural problems have contributed to G.M.’s lack of unequivocal business success. For all its progress, G.M. still lags Ford in key metrics of customer loyalty and profitability.
That may be at least partly due to the fact that regrettably, G.M. has had five chief executives in five years. While the reason for each change was understandable, another important reminder from comparing the G.M. and Ford trajectories is that stability of management matters much in achieving success in any enterprise.
Most recently, when Daniel F. Akerson had to retire suddenly for personal reasons, no one had yet been fully groomed as a successor. Eschewing an outside search, the board turned to a G.M. lifer, Mary T. Barra.
While Ms. Barra has mostly gotten off to a good start, she faces her own challenges. Back in 2009, when we were trying to figure out who should replace Rick Wagoner as C.E.O., a very experienced businessman told me, “No insider has ever been successful at changing the culture of a company.”
Unfortunately, under the gun of bankruptcy, we had no viable alternative for the chief executive job other than a lifer, and of course, effecting culture change must be the responsibility of a company’s supreme leader.
Now, Ms. Barra finds herself with that critical task. Happily, even if G.M. hasn’t caught Ford, the company is performing well – sales are strong, profits are gushing and new workers are being added.
But without getting the culture right, G.M. can never be declared fully healed. That is still a work in progress.