Leading Change

Change-ahead– My perspective on a conversation with the CEO of General Motors

The last few weeks was characterised by a period of confusion and general displeasure, I was in an early mid-life crisis. Arguably, I still am. On the one hand, my dream of creating value in the world is as distant as ever, and on the other, I fully recognise the need for some form of change. I was not happy with where I was and desperately searching for answers. There was an article published some time ago about a holocaust survivor who happens to be a very well respected psychiatrist before being captured by the Nazis, his name was Viktor Frankl. Without delving too deep into his story, I was struck by one of his theories on mans’ search for meaning: Some draw happiness from within, others do so by the act of ‘giving’. These people are most satisfied when the other group is happiest, whether it was contributed to directly or indirectly. With reflection I came to the conclusion that I belong firmly in the latter category. I am most satisfied with myself when I contributed something positive to this world; value creation since then has edged closer to the centre of my meaning of life. But, and here is the big but, I am not currently creating any value! Crucially, I am not engaging in any activity which would assist me towards that goal. Something need to change, something must be done.

One day in March, I chanced upon an ad for an event headed by the CEO of General Motors at London School of Economics. First of all I like to add that I am a sucker for the famous. Couple of years ago whilst inter-railing across Europe, which seems like the thing to do at my age, my friends often joked about my feverish appetite for landmarks which boasts ‘world-famous’ in the travelling guide. I would repeatedly lead them through many narrow alleyways in between getting lost, to arrive at a rather plain looking building before happily exclaiming ‘this is it guys! It’s world- famous!’ In hind sight most of them did turn out mediocre, but I took a photo anyway, they must be famous for something!

'This is guys, it's world famous!'

‘This is it guys, it’s world famous!’ – Venice 2010

‘CEO of General Motors’ grabbed my attention immediately, then the title lit up my imagination – Leading change. Perfect. I was not entirely sure what this change entails, the description goes along the line of hearing his view on the transformation of the company from bankruptcy into a hugely profitable one within a very short period of time. A little dig on the CEO’s profile revealed an experienced man with tremendous success throughout his career. Record profits and record expansions from one firm to the next, and right there and then, my mind was made up. Being a leader would entail many qualities what would propel me towards the goal, and with zero hesitation I signed up to the event list.

I arrived at LSE shortly before the starting time, sitting myself on the balcony of a lecture hall with a great view of the podium. The seat was a little narrow (I have been going to the gym religiously of late), comfortable never the less and it certainly wasn’t going to distract me from the talk (Really it’s because the guy sitting next to me I imagine, prefer bacon double cheese over a bowl of salad). The seats filled up pretty quickly, and after a brief introduction by the chair of the event, the CEO took over the microphone with an air of relaxed ease. There he was, Mr CEO Dan Akerson, a man who commanded my respect before I even know much about him. He was bold in between patches of white on the sides of his head, and spoke with a distinct American accent. He opened on a light note that he only just flew in from Germany after a meeting with Chancellor Angela Merkel, ‘I had to tell her I have a speech at LSE and must leave.’ Then amongst chuckles in the audience added ‘Gotta say that wasn’t very easy!’ With that he began recounting his career. He was a navy academy undergraduate before joining the navy, after a brief spell he joined several technology firm, first of all MCI Communications, where he took on the powerhouse Bell Lab and broke their monopoly. He then went to Carlyle Group, a private equity firm where they made record profits, before joining GM in 2010, turning around the struggling company to achieve the largest profit ever. There was a recurring theme of taking on big rivals throughout his career, and I could see as well as hear in his voice that he was extremely proud of those moments. This is a man who loves taking on seemingly impossible challenges; someone who thrives on tasks nobody thought possible! Within all this pride came a quote from Margret Thatcher, who he especially mentioned as her passing was only a few days earlier –

‘You may have to fight a battle more than once to win it!’

Persistence he said, tenacity, was the key to win. The focus of the talk invariably went to his current role as the CEO of General Motors. What happened to the crown jewel of proud American manufacturing, the brand which commanded the rare AAA debt rating prior to filing for bankruptcy in 2009, he explained, is the inability to change. The management did not prepare ahead and made to pay for the changing market, GM failed because it did not anticipate long term changes and simply could not react quickly enough. He saw what he described as chronic mistakes made by the previous managements: ‘Companies must prepare for change in the future’  ‘…willing to predict and meet those changes’. What he focuses on isn’t this year or the next, but 10 or 20 years down the line. An appetite for short term performances do not bold well for long term gains he declared. This stinging remark could well be referring to the current banking crisis, where short term greed exacerbated the weaknesses in our economic models and helped fuel the longest/deepest financial crisis in peacetime. On the wall of his office rest a plague, in which a page from an edition of the Times showed 3 GM cars. What made the page so significant was that out of the three major brands of cars, you could not tell one brand from the other! The moral of the story is bad management, he affirmed, which allowed brand overlaps to erode individual identity. At the end of the day, products make the company, and when the brand value of a product fades you then have a bad company. Dan blamed it all on the short sightedness of the previous leadership, where during the boom times they expanded too quickly without much consideration, squandering cash to buy IT companies when they really should have invested in their core products, to meet changing demands and the need of tomorrow.

A business model should be flexible Dan exclaimed, it should be updated regularly to suit the changing world. If you aren’t going to attack your own business model, your rivals will. ‘I’d rather change my model and burn then seeing my rivals beating it down!’ In between all the seriousness, a thought provoking joke on CEO lightened the mood.

‘A CEO resigned and left behind 3 envelops. He instructed the new CEO to open one, and one only during emergencies. After a bad quarterly report, the new CEO opens the first envelope, it reads – Blame Me. So the new CEO blamed the previous head and everything was fine. The next quarter came another bad numbers, so the CEO opened the second envelop – Blame Macroeconomics. The CEO survived but the third bad quarter came. He calmly opened the third envelope – Now Write 3 More Envelopes’

A fascinating dig at the unscrupulous CEOs of today. Dan closed his opening speech with a quote from Churchill – a pessimist sees the difficulties in every opportunity, an optimist sees opportunities in every difficulty. Most people find excuses to stop because it is the easier way out; people are comfortable being still and everything is there to fight change; evolutionarily speaking change implies danger, and naturally we prefer to stay the same. It takes visionaries, go-getters, risk-takers, people who want to be more than ordinary to adapt to change. In this world of information, the hardest part perhaps isn’t change itself, but to identify what is changing and position ourselves likewise. We should all strive to take a minute of our daily life to feel the pulse of change, the wave of success waits for no one!

The latter part of the talk was in the format of Q&A, where the bulk of the questions were on the topic of leadership. Drawing from his vast experiences at the highest level, there was never a doubt in his mind in the importance of developing leadership. Leadership he explained is more than a manager of the people, more than paperwork and shouting instructions – do this, do that. Leadership is about inspiration. Not answering the what, but why. There was an interesting TED Talk on why Apple is outperforming its rivals despite offering similar technologies, people buy apple because they align their belief with the product itself. Just like a leader, one must align the motivations of employees to the greater goal. If they know exactly why something is needed to be done, rather than being told this is what you need to do, efficiency goes through the roof! An old chairman who Dan admired apparently couldn’t even manage a group of boy scouts, but to them he was inspirational, somehow he always manages to pick them up when they are down. Leader will invariably face difficult choices, but he will make them nevertheless. Dan repeatedly stressed that being a CEO is not the same as being picked to be the class president; it is not a popularity contest. Of course been loved by all is a bonus but sometimes that is simply not possible, difficult choices have to be made, someone is bound to be displeased. As long as the intention is for the greater good, sacrifices had to be made.

‘’Love is good, but earn respect first!’

The talk has given me a few insights into the mind of a leader, when I came home I compiled a list of things I liked about him, qualities that made him appear very personable as a leader, and indeed very likable as a person, someone who I’d gladly spend an afternoon over a cup of coffee!

  1. Humour – There were lots of funny anecdotes from his experiences as a CEO, a husband and just a down to earth working man. These little snippets of stories, sometimes mundane things, made him very personable, and I see him as someone I can trust and also have a laugh with.
  2. Candid – The way he talks and answering questions is very frank, especially as a CEO. He’d openly admit management mistakes and criticise decisions without meandering around the truth. I thought he may have deliberately used ‘I really shouldn’t say it as a CEO’ as a device to show he’s honest, which in this day and age is rare. He did so with a pinch of humour.
  3. Humble – The way he addressed everyone and carried himself shows a man of humbleness, he’d often answer a question with ‘my opinion/guess is as good as yours’.
  4. Reliable/Professional – Throughout the conversations, whether he was talking about his time at MCI Communications or General Motors, he displayed a deep understanding of the business, mentioning technical terms which only experts would know. I can see he had taken a great deal of time learning each part of his businesses and products.

This is a great contrast from my impression of Ignacio Visco, the chairman of the Bank of Italy whose event I have also been to. Both are leaders no doubt and hold great experiences, but for me, Ignacio appeared a little shady. He joked a tad too much, which perhaps reflects the Italian culture, and reminded me a little uncomfortably of Mr Berlusconi. Who himself is a big joke. Ignacio actually avoided answering a few questions very bluntly, which simply made him feel untrustworthy, as if he was protecting himself. All in all, Dan trumped Ignacio in my eyes.

Dan Akerson wearing the LSE cap at the talk

Dan Akerson wearing the LSE cap at the end of the Q&A

Overall I thoroughly enjoyed Dan’s talk, you can say I am inspired by his story – the intelligence of predicting change, the valour of forcing change, and the inspiration of leading change. Ultimately I aspire to become like him, a successful leader. I may still be lost on the road there, but my eyes are more focused and my pace brisker.

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