Mary Barra’s Road Map for GM Centers on Customer Data, Connectivity – Wall Street Journal

Posted: Monday, October 26, 2015

MARY BARRA | ‘There is a lot happening in this industry. It is in transformation.’

Mary Barra, chief executive of General Motors Co.
GM


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, has proved she can steer through turbulence. About a month into her tenure as CEO, a costly and embarrassing safety crisis that has been linked to 124 deaths forced an overhaul of GM’s culture. Soon after, activist investors presented a list of demands and Ms. Barra negotiated a truce.

Tougher roads could lie ahead.

Earnings growth is accelerating, but GM’s stock is stuck in neutral while Tesla Motors Inc. and Uber Technologies Inc. attract substantial valuations with far less revenue than GM.


Ms. Barra says tough decisions are being made that will show Wall Street her company is built for the long haul: Billions are being spent to position the century-old auto maker as a leader in connected-car technology and electrification; the company is scaling back in markets where a clear return on investment isn’t evident; and margins are now the focus instead of market share.

The Wall Street Journal sat down with Ms. Barra at GM’s vehicle-testing grounds west of Detroit recently, and talked about managing the largest U.S. auto maker after a crisis. Here are edited excerpts:

WSJ: GM is at the center of a rapidly changing industry, and it must compete with companies like Alphabet, the parent of Google, and Apple for top engineers. What is this doing to the talent pool?

MS. BARRA: Globally, 25% of our salaried employees have been here less than two years. I think that is a statistic a lot of people don’t recognize.

When you look at just the leadership team, it’s about half and half of people who have [come] here in the last five years and people who have been here multiple years.

I want diverse views, diverse backgrounds, diverse experiences. Increasingly we have that in every part of the company. People want to say, “Oh General Motors, 100-year-old company.” We don’t have 100-year-old employees.

WSJ: People used to talk about the “GM lifer” spending an entire career at the company. Is that outdated?

MS. BARRA: I’m a GM lifer and I still want to create an environment where people want to stay. When you look at the war for technical talent that will go on, there’s not a single industry that is not being impacted by technology. You’ve got to create an environment where people want to come because it is a company they believe in.

WSJ: Do young people still love cars?

MS. BARRA: I think there still are a lot of people who love cars. I visit Stanford’s CARS group, and the people working on transportation, and there is still excitement, still a bunch of people who dream about designing cars and engineering cars. There are other people looking at our technology opportunities, and sometimes we do need to say, “We are a tech company,” and make sure we clearly articulate that.

WSJ: Vehicle ownership models are shifting. How is this affecting younger buyers?

MS. BARRA: We do believe the traditional ownership model is being disrupted. To what extent, no one really knows. But it is being disrupted by the sheer fact that 94% of the day the car sits idle. So we have car-sharing pilots running with Google and [a separate one] in New York. We’re going to see more change in the next five to 10 years than we’ve seen in the last 50.


ENLARGE

WSJ: Ride-sharing firms trade at large multiples largely because of the perceived value of the customer information they collect. Do people understand how much valuable customer data GM has through OnStar or other channels?

MS. BARRA: There is a lack of understanding of all that we’re doing. A lack of understanding of the importance of the embedded connectivity. A lack of understanding of the value of the data in the car that we control. We can tell you where you need to refuel, or if your battery [is low].

People are still going to need to get from point A to point B, whether they are going to do it in a traditional ownership model, or with sharing. For all of that, we are expanding our relationship beyond the car.

WSJ: You’re ready for car use to become a commodity?

MS. BARRA: No, didn’t say that. What we’re ready for is a lot of variation. When you’re a single urban professional you have one need. When you have four children, you have a different need. If we build a trusting relationship and we serve the customer well…we think we’re uniquely positioned with the scale we have.

The whole senior leadership knows there is this incredibly important core business that we’ve worked hard to make efficient, and we’ll continue to do [that] and win. But there are also new models of transportation that we’ve got to quickly seize because there are assets that the traditional auto makers have that [Google or Apple] don’t have, and there are specific assets at General Motors—like our embedded connectivity—that I am confident will drive the future.

WSJ: Your executives are operating in a type of crisis mode. How would you describe GM’s sense of urgency?

MS. BARRA: I like to quote [GM North America chief] Alan Batey: “Time is not our friend.” There is a lot happening in this industry. It is in transformation and many times in transformation there are winners and losers. We not only want to win, we want to win and define. So there is a huge sense of urgency.

WSJ: You’ve been more disciplined in deploying capital of late. How do you make the right bets?

MS. BARRA: One of the raps against the auto industry is you think you need to be all things to all people. No, we’ve got to decide where we can make a sustainable return or we shouldn’t deploy the capital.

WSJ: GM is among the biggest auto makers in the world and some would say it needs to be even bigger to survive or thrive. But you are more focused on margin growth.

MS. BARRA: To deliver those margins you’ve got to make the right decisions and look at yourself and say, “Do I have a viable business [in a region or vehicle segment]?” If I don’t I have no business being there.

WSJ: India is an example where GM is looking to win. Where does GM see itself winning there, as a brand or a segment of vehicle?

MS. BARRA: Chevrolet [will be a winning brand]. The compact-car segment is very important but there are a lot of vehicles you can take off a core set [of architectural components]. That’s why we announced the new family vehicles that have the right price point and technology and features to be successful in places like China and India and Brazil and Mexico and South Africa.

WSJ: You’ve talked with India’s leaders about safety regulations, and the need for updates. Can you be influential in helping India modernize?

MS. BARRA: Safety can be a differentiator in those markets and I think safety will become a standard across the board. I think we’ll get to a new standard of safety that is common and it won’t be the differentiator that it is now. It could be an opportunity in some of the developing markets.

Mr. Nagesh is a reporter for The Wall Street Journal in Detroit. Email him at gautham.nagesh@wsj.com.

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