July 13 (Bloomberg) -- The fates of General Motors Co. and Chrysler Group LLC, hobbled by their histories, now rest with two outsiders with no auto experience. They may be the perfect guys for the job.

Ed Whitacre, 67, who as chairman and chief executive officer of AT&T Inc. assembled the world’s largest telecom company, became GM’s chairman on July 10. His counterpart is former Borden Chemical Inc. CEO and chairman Robert Kidder, 64, a turnaround specialist who assumed the chairmanship at Chrysler when it left court protection last month.

“There are very few examples of industries that were reinvented by insiders,” said Stephen Mader, vice chairman of executive search firm Korn/Ferry International in Boston. “These outsiders are the industry’s one opportunity.”

Whitacre and Kidder arrive armed with unique assets -- $77 billion in bailout money from the U.S. government and a White House mandate for change. They will be deeply involved in the overhaul of each automaker, Mader said, even though they have non-executive roles without responsibility for daily operations.

“I’ll be more active than most chairmen,” Whitacre told reporters last week. “The American taxpayers were nice enough to loan us a lot of money. We owe them a lot of money back. And we’re going to pay that back.”

Through a spokeswoman, Kidder declined to comment for this article.

Crazy Ideas

The most important challenge facing Whitaker and Kidder will be undoing the worst tendencies of GM and Chrysler, said Warren Bennis, founder of the Leadership Institute at the University of Southern California in Los Angeles.

“Changing the culture of these companies has got to start at the top,” Bennis said. “They’ve got to drive a culture of innovation where people can come up with crazy ideas and not be laughed at.”

At Detroit-based GM, Whitacre confronts a change-averse organization where poor performance could hide in the bureaucracy, said Joseph Phillippi, auto analyst at AutoTrends Consulting in Short Hills, New Jersey.

“There was an incredible, ongoing lack of accountability at GM,” said Phillippi. “And if there ever was a desire to change, it got subsumed by the idea that, ‘We’re big GM, we’re omnipotent and we’re too big too fail.”

At Chrysler, Kidder, a former McKinsey & Co. consultant, must reconstitute a company once known for stylish cars that lost engineers and designers during 11 years of ownership by Germany’s Daimler AG and then by Cerberus Capital Management LP of New York, Phillippi said. Kidder will oversee CEO Sergio Marchionne, 57, also CEO of Fiat SpA, which aligned with Chrysler after the Auburn Hills, Michigan-based automaker finished its restructuring in bankruptcy court last month.

Hollowed Out

“Chrysler has been so hollowed out from an engineering standpoint, they’re really dependent on Fiat,” Phillippi said.

As CEO of battery maker Duracell International Inc., Kidder boosted earnings 35-fold from 1990 to 1994, and led the dismantling of the former Borden Inc. Kohlberg Kravis Roberts & Co. of New York owned both companies then.

Members of President Barack Obama’s auto task force recruited Whitacre and Kidder for their new posts. Ron Bloom, an administration adviser, reached out to Kidder, while Whitacre said he spoke with the administration’s Steven Rattner.

As CEO of AT&T and predecessor Southwestern Bell from 1990 to 2007, Whitacre built the smallest of the so-called Baby Bells into the world’s largest telecommunications company. He retired with a compensation package valued at $158.5 million, according to the Corporate Library in Portland, Maine.

‘Very, Very Tough’

“Whitacre pulled off a big business transformation on a very complicated, large scale,” said Mader. “GM is in need of the same -- a huge transformation with big decisions.”

The 6-foot, 4-inch Texan known as “Big Ed” will bring a no-nonsense style to the GM board, former associates said. Besides Whitacre, Obama’s task force is replacing six directors on GM’s 13-member board, which was criticized by U.S. lawmakers last year for being too easy on company executives.

“Ed can be very, very tough with people who refuse to make decisions,” said Jim Kahan, a former AT&T senior executive who helped negotiate more than $300 billion in acquisitions. “This is an action-oriented guy. If you want to just study things and stick with the status quo, it’s not going to be a good match.”

Whitacre will supervise Fritz Henderson, 50, a 25-year GM veteran who became CEO March 29 after Rattner asked the previous chief, Rick Wagoner, to step down.

‘Walk-Around Guy’

“A lot depends on the chemistry between the two of them,” Kahan said of Whitacre and Henderson. “If the CEO looks at the directors as a necessity and something he has to deal with, a political expediency, it’s not going to go well.”

Whitacre said he will be a regular presence throughout GM, not just in the boardroom.

“I’m a hands-on, walk-around guy,” he said. “I kind of walk around and ask questions and talk to people and outline objectives. And try to make sure all that happens.”

How will he evaluate Henderson’s performance?

“By how much money he makes for the company,” Whitacre said with a smile.

Henderson said he welcomes the active involvement of his new boss, saying he has found that Whitacre favors phone or face-to-face communication over e-mail.

“He’s obviously a very successful CEO from AT&T,” Henderson said in an interview. “I’d be stupid if I didn’t take advantage of that kind of experience. And I’m not stupid.”

Washington’s Ways

The new board can expect a demanding chairman, said Jim Ellis, the former general counsel at Dallas-based AT&T. The days of daylong GM board meetings that follow a leisurely dinner the night before are over.

“In 18 years as his general counsel, we never had a board meeting last longer than four hours,” said Ellis, who retired in 2007. “He’ll expect people to come prepared and to have done their homework. He’ll lead the discussion and a decision will be made. There will not be a lot of soul searching.”

Whitacre knows how to work constructively with Washington, said Roger C. Altman, deputy Treasury secretary in the Clinton administration.

“He’s had a lot of experience with the government because AT&T is a highly regulated company,” said Altman, now chairman of Evercore Partners Inc., a New York private-equity firm that advised Whitacre on several AT&T acquisitions. Evercore also served as a financial adviser to GM.

Whitacre’s political savvy may come in handy now that taxpayers own 61 percent of GM and Obama is mandating a 40 percent improvement in industrywide fuel economy by 2016.

Praise in Ohio

After Kidder boosted earnings and built Duracell into a marketing power, KKR Chairman Henry Kravis in 1994 called him “one of the most talented executives in America.” In 1995, KKR named Kidder CEO of Borden, where he shed the dairy and food units to create Borden Chemical. The remainder of the company is now Columbus, Ohio-based Hexion Specialty Chemicals Inc.

“Borden was sold off in pieces, which you’d think from a community point of view, was a negative,” said Bob Milbourne, president of Columbus Partnership, a civic group that includes Kidder. “But one major part of the company remains, so in the end Columbus is better off for the job Bob Kidder did.”

Kidder’s approach is informed by his background as a McKinsey consultant, said Steve Allen, CEO of Nationwide Children’s Hospital in Columbus. Kidder is chairman of the hospital’s board.

McKinsey Guy

“Bob has this marvelous ability to quickly grasp the principles of your business and come at it from a different direction and make you think,” Allen said. “He has a very direct manner, not to the point where he’s brusque, but he doesn’t beat around the bush.”

Kidder will use his organizational skills to impose discipline and reconstitute Chrysler as it blends with Turin, Italy-based Fiat, said Korn/Ferry’s Mader.

“The goodness of a McKinsey guy is he’ll get all the strategic planks right,” Mader said. “He’ll bring the analytical tools to make sure all the right questions are asked and he’ll have the ability to evaluate them.”

Kidder’s past took him close to the auto industry at times without actually joining it. He grew up in Michigan and attended the University of Michigan. He also counted Ford Motor Co. among his clients during his McKinsey days in the 1970s, said Allen.

Kidder, who is also lead director for New York-based Morgan Stanley, knew the auto task force’s Bloom from investment- banking circles, Milbourne said.

The decision to take on the Chrysler job surprised Kidder’s friends. Besides running private-equity firm 3Stone Advisors LLC in Columbus, he owns a Santa Barbara, California, vineyard that appeared in the movie “Sideways.”

“We were all wondering how he got himself into this,” Allen said. “We said, ‘Why would you want to do this?’ Bob’s answer: ‘It would be a great strategic exercise.’”

To contact the reporter on this story: Keith Naughton in Southfield, Michigan, at Knaughton3@bloomberg.net

Last Updated: July 13, 2009 00:01 EDT