At General Motors’ (GM) Detroit headquarters, executive offices tend to be on high floors, have amazing views of the Detroit River, and contain a collection of model cars. The latter is especially true for car guys, that swaggering breed involved in design or engineering as opposed to accounting or human resources. Two things set apart the office of GM’s current No. 1 car guy: One, its occupant is a woman. Two, sitting on a cabinet among the toy cars is an Albert Einstein bobblehead.
Mary Barra, GM’s first female chief product officer, is coy about the bobblehead. Her boss, GM Chief Executive Officer Daniel Akerson, gave it to her after a war-game competition among executives to see who could best attack GM. Barra’s team won. “It was really about what strategy we were going to take,” says Barra, who’s been at the company for 33 years. She’s responsible for the design and quality of all GM cars and trucks. Asked to share her secret to defeating GM, she smiles, and the lessons she learned in the HR and public-relations departments kick in. “Um, I don’t really want to tell you.”
Barra, 51, comes across as measured and standard-issue corporate, the opposite of swaggering. Rather than brag about the awesome torque of the new Corvette, she talks about “driving an organization that’s customer focused.” She considered buying a restored Chevrolet Camaro a few years ago but hasn’t, in part because, says a confidante, it would be a dangerous temptation for her teenage son. She’s a corporate survivor who’s played a role in the soap opera of GM management for a generation, emerging on a very public stage as the leader of the company’s $15 billion vehicle development operations, a role that will largely determine the success or failure of the company for a decade or more.
After a $50 billion U.S. government bailout in 2009, GM has made more than $22 billion in profit over the past three years, while making some of its best vehicles ever. Still, GM is nowhere near as profitable as global competitors such as Volkswagen (VOW:GR) and Toyota Motor (TM). Adam Jonas, an analyst at Morgan Stanley (MS), says GM’s operations are much more complex—and expensive—than those of its major rivals.
To make GM the world’s most profitable automaker, Barra is following the example of Billy Durant, who founded the company 104 years ago: Slash development costs by building a wider variety of cars and trucks off the same parts. And she’s trying to do that while avoiding what happened in the 1970s and ’80s, when the company earned a reputation for slapping Chevy, Cadillac, and Oldsmobile badges on similar-looking cars to save money. There wasn’t much difference between a Chevy Cavalier and a Cadillac Cimarron, which Time magazine declared one of the 50 worst cars of all time.
“Mary Barra has probably the hardest job in the global auto industry right now,” says Morgan Stanley’s Jonas. “If she can really knock the cover off the ball, she deserves to be CEO of GM.”
During her time at the company, Barra has worked in engineering and run an assembly plant, among other product-centric roles. When Akerson appointed Barra senior vice president of global product development in 2011, though, she had just spent a year and a half as GM’s head of HR, which did not sit well with the car guys in the company and around Detroit. “The fact that she’s leaving Human Resources to take on The General’s most important task certainly has the scent of Old GM’s corporate politics on it,” wrote the Truth About Cars, an industry blog. (One commenter posted a YouTube link to a scene from The Enforcer, in which Dirty Harry is told he’s getting a desk job in the personnel department. “To personnel?” he says. “That’s for assh---s.”)
“She had a difficult time getting credibility because she was in HR before, even though she is an engineer,” says Rebecca Lindland, an industry consultant. “It’s sexism, and I think it’s the HR title.” Her vanilla style probably didn’t help, either. Bob Lutz, the swashbuckling former Marine pilot and legendary car executive, used to fly his own helicopter to work. At Chrysler (FI:IM), he developed the Dodge Viper. During his time running GM car development, he brought new life to the company’s lineup and modernized production with global vehicle platforms that Barra is now benefiting from. “As to whether she’s going to be the next Bob Lutz, I don’t think so,” John Wolkonowicz, an independent automotive consultant, says. “I don’t get the impression that she has gasoline running through her veins.”
Reporters haven’t followed her through pit row at Daytona International Speedway as they did Mark Reuss, president of GM North America, earlier this year, or talked about driving on the Nürburgring race track in Germany as they have with CFO Daniel Ammann. Both Reuss and Ammann are also considered potential CEO successors.
Barra’s most high-profile moment came in 2009 after then-CEO Fritz Henderson put her in the HR role to help groom a new generation of leaders as the company worked to come out of bankruptcy. She allowed employees to wear jeans. “Our dress code policy is ‘dress appropriately,’ ” she announced in a memo. Barra had been attacking GM’s bureaucracy, slashing the number of required HR reports by 90 percent and shrinking the company’s employee policy manual by 80 percent. But loosening the dress code drew a flood of calls and e-mails from employees asking if they could, in fact, wear jeans. One manager was upset about the image this might send to company visitors. “So you’re telling me I can trust you to give you a company car and to have you responsible for tens of millions of dollars,” Barra responded, “but I can’t trust you to dress appropriately?”
It wasn’t a fashion issue. Barra saw the dress code, along with other changes, as an opportunity to have a conversation about responsibility. “There was a culture in the past where the rule was the rule and when you weren’t empowered to make the decision you could all just complain about the rule. Well, now we were really empowering virtually every single person,” Barra says. “We had a lot of HR for HR.”
That’s about as negative as Barra will go. She won’t be goaded into criticizing her colleagues and refuses to take shots at former executives. She stays on message: Her job is to make cars and trucks people want to buy, and to do so efficiently.
The biggest part of that is reducing manufacturing complexity. That means building cars using “platforms”—industry-speak for the basic structure and parts that can be tweaked and repurposed for multiple vehicles. The idea is to use as few platforms as possible, which speeds up development and lowers costs. VW is pushing to reduce its 15 platforms to five by 2019, with more than 55 percent of its vehicles based on just one of those platforms. VW says this will cut its costs by 20 percent.
In 2010, GM had 30 platforms. Barra says the company is on track to reduce that to fewer than 10 by 2020, which should help reduce development costs by $1 billion a year. She adds that GM can save an additional $1 billion by avoiding the stop-and-start of vehicle-development programs that plagued the company during the lead-up to bankruptcy. She’s also looking to pare $1,000 from the cost of each Chevrolet Malibu sedan, according to three people familiar with the plans, who requested anonymity because they weren’t authorized to speak about the work. Asked for specifics about the savings push, Barra merely says, “I have goals, significant goals, across many of our next-generation products.”
Barra is also cutting layers of management. GM used to have three executives overseeing the development of every vehicle. In July, Barra cut that to one. GM had tried the one-vehicle-one-boss approach when it developed the Chevrolet Volt plug-in hybrid. The speed with which the Volt went from concept to production was impressive, though its sales weren’t. “We talked about how efficient that was,” Doug Parks, former Volt program chief engineer, recalls. “She quickly made the decision and we took the whole company that way.”
All those efforts at efficiency are meant to widen profit margins, the ultimate yardstick of an automaker’s success. CEO Akerson has said he wants to match the best margins in the industry. Among the large carmakers, Toyota leads with an 8.6 percent operating margin in the most recent quarter. Hyundai Motor (005380:KS)’s was 7.8 percent; VW’s, 5 percent. GM’s was 2.6 percent. If GM’s number improves, that would help make the case for Barra to become CEO. Akerson indicated as much last year during a Wall Street Journal forum on female executives. In an interview a few weeks later, Akerson conceded that his public comments about succession had ruffled some feathers. “The group dynamics aren’t terribly good,” he said.
Combative working conditions aren’t new for Barra. She began with GM in 1980 as a student at General Motors Institute (since renamed Kettering University) in Flint, Mich., and landed her first job as a plant engineer at Pontiac Motor Division, where her father, a die maker, worked for 39 years. There were few women and even fewer 18-year-olds. “It was a rougher environment,” she says. “It makes you harder.” Her big break came when GM put her in a program for high-potential workers and gave her a scholarship to get an MBA from the Stanford Graduate School of Business. She became an executive assistant for then-CEO Jack Smith, a perch that gave her a window into how the company worked. She recalls visiting senior leaders at GM to talk about diversity and women’s issues while she was pregnant.
“You started to see an enlightening,” she says. “And with some people, they’d even say, ‘My daughter just graduated from college and I want her to have these opportunities.’ ” When she ended a recent meeting at 4 p.m. to pick up her daughter, others thanked her for it. “One of the guys said to me, ‘I’m so glad you said that because I’m meeting my wife.’ A lot of women’s issues are men’s issues as well.”
GM now has five female plant managers in North America. Four of its 14 board members are women, as are four of its 18 officers. “I’m not blind to the fact that sometimes it’s probably helped” being a woman in the car industry, Barra says. “Sometimes it’s probably hurt.”
Still, she likes the idea of helping motivate young girls to go into math and science. In April, Barra visited an elementary school in Detroit where third-graders were working on a science project demonstrating wind power. After a brief talk exhorting the kids to study hard, Barra and Parks, now vice president for product programs, joined the kids in the day’s lesson, building paper sailboats and using electric fans to race them across the classroom floor. As soon as the race started, it was clear that Barra’s and Parks’s boats had a fatal design flaw: The sails were too small.
Barra and Parks rebuilt their boats with bigger sails. Parks sat down at his fan and promptly lost. There was one more race, and Barra left nothing to chance. She crouched down in her business suit, turned the fan to high, and her boat shot past everyone else’s for a decisive victory.