The article talks about the change in the strategy of General Motors. In short, it is on how a company like GM turned into a customer focused organization...

1. c o v e r s t o r y general motors
gm’s
GM's relative share price movement
New GM: Finding favour in the eyes of the investors
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“we are a total customer-
detour
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General Motors
Focussed company...”
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A veteran at the company, Timothy E. Lee, President – Intl.
Operations, GM, talks about new GM’s philosophies and strategies.
trick
105 Ford
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Toyota
B&E: You were appointed as great product. And then, you
95 the President of GM’s Inter- can rely on a great manufac-
national Operations during turing and distribution team
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Nov 19, 2010 Jan 28, 2011 a phase which is counted to make them and sell them.
amongst the worst in the That would call for customi-
the new gm is all about change – smaller, Source: NYSE
history of GM. Much has sation, which is happening in
fuel-efficient cars, customer-centric changed since then. The new a big way in our company to-
approach, focus on emerging markets and JV in India. GM is serious about the BRICs, GM – what’s it like? day. This is a philosophy that
most importantly, profits. pawan chabra writes and that’s bad news for its rivals. Timothy E. Lee (TEL): I have timothy e. lee new GM sticks by. Wherever
about how gm’s strategic shift saved its day.
A decade back, a GM zero-gas burning been at GM for over 40 years president – Intl. ops. we sell, we are a total custom-
car would have seemed unimaginable. To- now, so I am typically from General motors er-focussed company –
F
or decades together, General Motors was exalted as a symbol day it is not. The Chevrolet Volt is on sale the ‘old GM’ as you might emerging or mature market.
of American success. A success that would only be got by in US since mid-December 2010, and will want to call it. So thankfully, even as we
thinking big, making big and selling big. Today, it is cited as be sold in five more market by end-2011 were moving towards becoming a ‘new B&E: So you mean to say that technol-
a failed American freighter. Its very DNA got the better of it, forc- – Australia, Brazil, China, Japan and Can- GM’, I was one of the six chosen by the ogy might even take a back seat in the
ing the Detroit giant to detour. Precisely fifty years back, GM had ada. Though numbers sold so far barely management to head the global sales for future, if you have to choose between
grown into a Godzilla-making factory. It had embraced vertical cross the 700 unit mark, what’s most im- GM. It felt like I was representing every customer focus and technology?
manufacturing and its list of offerings either included products When Dan Akerson took charge as GM’s CEO in August last year (Gm’s 4th in 18 portant is that the Volt indicates an old, ‘old GM’ fellow – the retiree, every ac- TEL: Both would go hand-in-hand. Let
designed to match up to the budgets of luxury car buyers, or live months), many forecasted that he would run GM into the ground. Strangely, he creaky GM’s willingness to bend and tive worker from the shop-floor to my me assure you, no other company has a
has fared much better and longer than his petrolhead predecessors.
up to the fancies of truck-lovers. Its audacity clouded its vision – squeeze through to win over a “friendly, desk – at the new company. But to say Chevrolet Volt to offer. If you have a
the downfall was imminent. And so it happened in January 2009, favourable” mask. what new GM is like, I would put it thus chance to drive the Volt, I am sure you
when GM filed for bankruptcy. Fuel-guzzlers do not please a na- sumer-friendly and smaller offerings. Though new product line is a concern – all the cars and trucks we have in the will be unbelievably impressed with the
tion which is battling with rising unemployment. Not even if they Says Timothy Lee, President – International Operations, GM, yet for GM (Credit Suisse predicts that while marketplace today, be it the Cruze, the performance of the vehicle. It’s a state-
carry a GM warranty. Change it needed, and change it did. From “Wagoner’s successors – Fritz Henderson and Ed Whitacre – tried GM’s portfolio was 40% new in 2007, the Beat, the Spark, all these products didn’t ment of the new GM’s technological
51.4% of market share in US in 1961 to 30% in 1990, and to under their hands on the wheel and infused a spirit of believing in small- figure fell to 14% in 2009), Akerson seems happen a day after we emerged from capability to the world. However, what
20% today, GM is a story of how a King-turned-pauper, finally er vehicles. This was very different from what Wagoner and his to have this issue sorted out. The company bankruptcy. They happened over a pe- our new CEO has brought to the table
realised that serving the middle-class is as important. And the fact predecessors believed in. Then, Dan Akerson took over as CEO, plans to spend $7 billion in 2011 in R&D riod of time. Our new business model is the customer-focus approach. The
that it still has a strong change of making it to history books as a and brought on table the customer-focus approach that was miss- – 40% more than in 2010, to try and put in is based on brand equity, profitable mistake we made in the past at old GM
phoenix of the modern capitalist world, is because all the three ing for years. Earlier, we used to think that GM will eventually place some new products in quick time. market share capturing, a focus on con- is that we looked at our business as an
CEOs who followed Rick Wagoner (Fritz Henderson, followed by become an engineering powerhouse. Now, I am convinced that The shift in mindset at GM has also played sumer sentiments, a concentration on engineering company and not as a cus-
Ed Whitacre, followed by the current CEO Dan Akerson) during the company will become a customer-focused company.” Apart in favour of the carmaker’s financials. Hav- better mileage vehicles, leveraging of tomer-focused company. But this is
the past two years, have appreciated this change in mindset. from this, the company has also increasingly targeted emerging ing already reported net profits of $4.77 growth opportunities in both mature changing very fast.
Cut to the present, and any GM insider who has lived the hor- and high-growth markets in the past couple of years – shifting its billion in the first three quarters of FY2010, and emerging markets. All these pro-
rors of the downturn will confess that GM investors giggle more head office to Shanghai is one big proof. Sample this: in 2010, for the company is expected to record a topline vide a low risk-high growth scenario for B&E: China has been a big revenue
while talking about the muted GM DNA, than while ranting about the first time ever, GM sold more cars in China than it did in US! of $140 billion in 2010 (higher than Ford’s the new company. earner for you. Is there any other
the world-record IPO on the 18th day of November last (which And as far as India is concerned, from a puny share of under 1% $120 billion), easily landing it a spot emerging market on your radar?
helped raise $23.1 billion and marked the comeback of the company in the compact, mid-size and executive segment in the country in amongst the top ten names on the Fortune B&E: How differently does new GM TEL: In 2010, GM China’s sales volumes
on NYSE). Muscular brands like the Saturn, the Pontiac, the Hum- 2006 (before the launch of the Beat), the company today commands 500 list of 2011. put the understanding of the emerg- grew by over 40%. But this growth in
mer and the Saab, no longer take shelter in GM’s umbrella (the 5.2% of the Indian market (figures for April-December 2010 as per The new GM looks better designed and ing markets into practice? China will slow down to around 10-
company sold them about a year back) and the $80 billion in loss- SIAM). As for China, Lee says, “We closed 2010 with a 13% mar- given the speed at which it is advancing, TEL: The formula to succeed in any 15% this year. So overall, you will find
es, accumulated over a period of four year, could soon become a ket share in China. We expect the market to grow by 10-15% in there will be others who will want to take market is to understand consumer re- us targeting all growth markets like In-
thing of the past. The world is staring at a new GM, with a new 2011 and we will grow our share.” News is that GM’s Chinese a shot at trying what the once symbol of quirements & engineer those into a dia, Russia or even Vietnam.
strategic vision, take the differentiating leap ahead with its con- partner SAIC, has already inked a deal with GM India to form a American success did – change.
54 4 february-17 february 2011 business&economy business&economy 4 february-17 february 2011 55