GM's Mary Barra to staff: "No more crappy cars." | Fortune

Good morning, everybody. It is a pleasure to be here with all of you today, but especially with Mary. When I started doing research before sitting down for this interview, I was blown away by her background. I think you're going to be incredibly interested when you hear a lot of this, too. Mary is GM's executive vice president in charge of global product development, and global purchasing, and the supply chain. And that is a really big title for an even bigger job. She is in charge of GM's $15 billion vehicle development operations. She happens to be the very first female chief product officer at GM. She's seen as a top contender to eventually run the company, and she's got a pretty amazing background. Most recently, she was in HR, but she spent over 30 years at GM as an engineer. She ran an assembly plant there, and she's an incredibly well-rounded executive. Mary has a Bachelor of Science in electrical engineering. She's got an MBA from Stanford. Mary, when I started looking back at your background, what drew you into engineering? And what drew you to a car company? I mean, this was supposed to be a car guy's realm. How'd you get interested? Well, thank you for that great introduction. And I think in our school from fifth grade on, I loved math and science. It was very natural for me to want to go into those. I wasn't quite sure what I was going to do with it. At one point when I was headed to college, I was just simply going to major in math, because I really enjoyed that. And then found that a career in engineering really applied math, and so it seemed to make a lot of sense. And then automotive is kind of in my blood. I grew up in southeastern Michigan. My dad was a dye maker at General Motors for about 39 years. So from the days where you stood outside the dealerships looking to see the new vehicles, that was how I was raised. So it seemed very natural to go into the auto industry. Do you drive a really fast car? I get to drive a lot of cars. That's one of the great opportunities that I get with the role that I am in right now. Currently, I'm driving a Cadillac SRX, but I've spent a few weekends in the Corvette. Really? You ever think of bringing a Corvette home? Oh, we do. And actually, one of my other favorite vehicles is a Camaro. So it's another, like I said, I don't want to say I'm a super fast driver, but I like cars that go fast. All right. So there is that certain thing that really drags you through. I mentioned that you were in HR, but you were not the typical HR manager. When you got to HR, I think you slashed something like 80% in the policy manual. You cut significantly the number of HR reports that have to be filled out. And I just wonder why you took that approach. Were you trying to break the culture at GM? Well, it was right as we were coming out of the bankruptcy. So we very much wanted to drive a new culture and make sure that we were really engaging people, empowering them, and getting rid of that bureaucracy that can kind of creep into a company that's 100 years old. So you have to use opportunities. And even though it was difficult as it was to go through the bankruptcy, one of the positive things was really you had the emotion and the attention of everybody. And we've got to do things differently. So it was really looking at what made sense and what didn't. So it was a rare opportunity. Was there a role model that you looked to in that? Or was there a game plan that you had coming into it? I mean, that's incredibly different than just about any HR manager I can ever think of. Well, through my whole career, I'd always been really dedicated to we win the hearts and minds of employees. We're going to have better business success. They're going to be happier employees. We'll have better results, better vehicles, et cetera. So I went into it saying, what makes sense for the employee? How do we best serve the employee? And recognizing from an HR perspective, we had to do things that supported the business. And if we had the best HR system but it didn't advance the business, it wasn't necessarily going to be best for the company. So that was my general plan going into it. And I found we had worked with a great team of HR professionals. And they really responded. And we were able to make some sustainable change. One of the things you did was relax the dress code a bit. Yes. What made you decide to do that? And was that something that the employees embraced or did you get some pushback in that sense? Well, it was probably the most interesting change and the biggest learning that I had into a culture when we did that. And we simply, as we wanted to signify change, one of the things, I think the dress code policy was 10 pages long. And we have people who interface with governments. We have people who are interfacing with their dealers. We have people that are working as assembly line workers. We have people who sit and work primarily on a computer. So a whole range. And so what we did is we said, dress appropriately. And that was it. Women hate that when they get that on a party invitation. True. But we always call someone. So we always call them. And there's safety in numbers. What are you wearing tonight? Right. And the interesting thing is it really became a window into the change that we needed to make at General Motors. Because I'd have managers sending me emails or calling me saying, I need you to write it down. And so I would take them through and say, OK, what do you do? I run a group of 20 people. I'm responsible for $10 million of budget, et cetera. And I said, so I can trust you with $10 million of budget in supervising 20 people, but I can't trust you to dress appropriately to figure that out. And it was really a step in empowering. Because we found that sometimes people hid behind the rules and didn't like them, but didn't necessarily step up. So it really encouraged people to step up. I mean, that's a huge part in the culture change at GM. And people will look back at the bailout and everything that happened. But GM is a much different company today. Talk a little bit just about what you were trying to do in terms of empowerment and how that translates across the business now. Well, again, we're on a journey. And we want to make sure that we're engaging our employees and really tapping into their innovation and their ingenuity in the vehicles that we develop. And the responsibility I have right now, we have over 35,000 people connected to either designing, selling, or buying the parts associated with our vehicles. And we really want to get them involved. They know how to do their job better than anyone else. And we need to support them as they do that and enable them to be creative and get their great ideas. So it really is changing that mindset. And I think we've seen results. I think we see it in the vehicles you see on the road today for General Motors. There was an analyst at Morgan Stanley who recently said that your job is the hardest job in the global auto industry right now. I mean, part of that is because of what you were just talking about, trying to tackle that. It's also because you're dealing with a situation where you have to slash development costs and still build exciting cars that people want to drive. How do you handle both of those incredibly difficult tasks? Well, I think I have one of the best jobs in the industry because we have over 100 car programs going on at any one particular point in time for 130 markets around the world. So whether I'm spending time in design, looking at new future vehicles, or spending time that are proving ground, driving them, and really infusing into everybody, if we're going to compete in a segment in any market, we're going to go to win. I think that was a change for General Motors. And frankly, the team has rallied around that because everyone, whatever industry or business you go to, people want to go and do their best. So I feel so much of what I need to do is just set up the systems, enable the processes, and have the right leadership that our designers and our engineers and our buyers can go do the best work they can do every day. And like I said, a simple thing I said to them is no more crappy cars. And that resonates. I said, okay, deal, you're on. I mean, I think there was sometimes so many boundaries put on them that we didn't give them a recipe for success. So now we're saying, hey, no excuses. If it's budget, if it's resources, we have to do great cars, trucks, and crossovers. And it's our job to enable you to do that. And it's really been a transformation. All right, give me a concrete example of a crappy car or a crappy innovation in a car, a crappy piece of a car that got changed as a result of that new strategy. I think it's hard to go back and say one specific issue. We have 12 executive chief engineers that are responsible for every car, truck, or crossover we make around the world. And it's empowering them to make the decisions. And I think you see it with some of the vehicles we've just put out, whether it's the Chevrolet Impala or the Cadillac CTS that's launching right now, the Corvette. I mean, I think when you look at the vehicle and you see that integration, because you can do a great car, but can you do a great car that's gonna be at the right price point for the market for the segment? And so enabling them to make those trade-offs and working on some of the structural fundamentals to get those right, whether it's the process in the business, whether we're attacking costs, structural costs, doing all those things really frees up the team then to do a great car and make those trade-offs. And I would also say- What's a trade-off that you might make for one of those three vehicles you just mentioned? Well, you make a trade-off of performance versus fuel economy. So it doesn't go quite as fast, but it's gonna get way more miles per gallon? And the secret to making those decisions is to really understanding the customer. How do you do that? I mean, do you just know the customer or do you actually do research back with the customer? Tremendous amounts of research. And then especially for the teams working on those vehicles, they spend time with customers. They, you know, in many parts around the world to understand a customer in China versus a customer in India versus a customer in Brazil or the US. And so spending time with those customers, doing their research, understanding where the competition is, and also predicting where we need to go. Because what a Corvette owner looks like may be very, very different than what a Volt owner looks for or what a Sonic owner looks for. So you have to know. It's one recipe doesn't fit every vehicle. That's really interesting. And I guess I'd never really thought about what a Corvette owner looks like compared to a Volt owner. Exactly. What do they look like? Well, you know, it's rapidly changing. I mean, with the Volt, we have the customers for two years in a row have been the most satisfied customer of any owner experience. They generally, though, are a customer that for the use case of the Volt, they generally are very rational in making their decision. A lot of people think if you're gonna buy a Volt, it's because you're making an environmental statement. But a lot of the customers are very rational, saying, you know, I can drive this vehicle and I can go 1,000 miles based on the way I drive because I drive to and from work less than 40 miles. On those occasional times where I'm gonna take a longer trip, I've got the ability. So that's that customer. Camaro, I mean, it's about performance. It's about what you can do in the tracks, zero to 60, important. Rational thinkers, does that tend to be men or women when it comes to the Volt? Rational buyer. Actually, both. I mean, but I actually think every customer when they're making, I mean, for most people, an auto is either the most important or the second most important purchase they're gonna make in their life. And so they act very rational. They do their homework, they're online, they're going to the dealers, and they're looking at the cost of ownership against the functionality. There's also a bit of pride of what vehicle am I parking in my driveway, and that all factors in. I'd like to talk to you a little bit about the broader economy. We all know what's happening here in this town, in Washington. The government shut down the hit that consumer confidence has taken as a result. I'm wondering if you've seen that show up in sales, and I also noticed that in Europe, GM put out some European car sales today, and they increased at the fastest rate in two years in September. I'm trying to figure out if that's a difference in what GM's doing, if that's a turn in Europe, or maybe give us a little insight into all of that. Well, I think from a European perspective, we are committed, and we've been making a lot of movement over the last few years, and I think it's starting to pay off. But again, the heart of any recovery for an automotive company is the product. And we have a really strong product cadence in Europe, and there's great products that we've just launched in the last couple months, so I think we're seeing that. Which ones are taking off? The Opel Mokka, which is kind of a B-segment, so a smaller vehicle, but an SUV. It's kind of an untapped market. Also, the Opel Atom, which is a little bit smaller vehicle, but you're able to customize it greatly, and really customize it to your own personal taste. Both of those are doing very, very well. In terms of what's happened here in the United States, have you seen a hit to consumer confidence, or a hit to sales, based on the government shutdown? You know, I think, after Warren Buffett's comments, I don't know if I can add a whole lot more. We're not seeing anything yet, but we're watching, and we're hopeful that the issues will get resolved, because our business is so tightly tied to consumer confidence. We've been watching, and it's been pretty phenomenal to see the turn in the auto industry overall. GM's done a great job, but it's just been phenomenal to watch car sales turn around, and get back to 16 and a half, beyond that. And what do you think, is this the new normal? Can we continue with sales like this? You know, I think we had gotten to a pretty high peak, but I think we're seeing that steady growth, and I think, at some point, it will level off, but there was a lot of pent-up demand over those years. So again, I think we're gonna continue to see steady recovery. I think that's what most of the automotive industry is expecting, especially in the United States. You know, clearly, we're seeing, I think, a start in Europe, as well. Mary, one of the things that I think about a lot is the issue of education, and trying to get girls to be interested in math and science, and stay interested. I've got two girls, myself, one who's very interested in math and science, and she's in fifth grade, and I don't know how to make sure she stays interested in that. I mean, as somebody who went on into engineering, do you have any lessons for us? Well, we do work, and I actually spent some time recently, and I think it was the fifth grade class in one of our Detroit classrooms, and I think the issue, and I have a 14-year-old daughter, as well, and making sure they stay interested in math and science. I think it gets to a point of connecting the careers, because a lot of times, especially when you say, I'm an engineer, well, a lot of times, a fifth grader, a seventh grader, doesn't really know what an engineer does, but if I look, listen to all the people and all the businesses that are represented in this room, you have engineers, you have technical skills, you have, you know, whether it's a company, a cosmetics company, there's engineers, there's scientists involved, and so I think we need to do a better job of pointing to math and science as the strong foundation that takes you to many places that are different than if somebody thinks of an engineer and they're thinking of a railroad, and so I think we've gotta make those connections better, and then I also think we really need to partner with the teachers across the country, across the globe, to make sure they're encouraging, because I have watched it with my 14-year-old, and there's a point in time, I think it's just in growing up, where they really kinda wanna step back and a lot of things are happening, and they're like, hmm, do I wanna be the smart kid, the nerdy kid? And math and science is hard. Yeah, but it's okay, and so, but I think the longer term is we've gotta connect to the careers that they wanna do. Well, Mary, I wanna thank you very much for your time today, and thank you for all of you. Thank you. That was great, thanks. Thank you.