Davos 2015 - An Insight An Idea with Mary Barra

I just want to thank all of you for being here today. My name's Becky Quick, and I'm an anchor at CNBC. Mary Barra is our guest today, the CEO of General Motors. And Mary, let's jump right into this conversation. You are just about a year into your job. You spent your entire life, your entire career at GM. But I have to think that things look a little bit different from the top. Obviously, it wasn't the year you were expecting. But what have you learned in that first year? Well, obviously, we faced a big challenge. And I think we've really quickly, though, started demonstrating and living our values of really putting the customer first. So every action we took last year was to make sure we not only did the right thing for the customer, we were transparent about it, and then really were open about taking the learnings and driving it into the company. So it's really been something that we've been able to accelerate behavior change, culture change from the learnings to make sure it never happens again. In terms of accelerating the culture change, what are some specifics that you've put in place, things that you can point to and say, this is something we do differently today than we did a year ago? Well, one is a complete commitment to safety of our vehicles. And so we've completely changed and, I would say, taken to a higher level our whole vehicle development process, the way we validate vehicles. And we looked externally. So we went to the aerospace, the nuclear industry to say, a different perspective on safety, how do we incorporate that into the way we develop vehicles? And so that's one measurable change. Then as you look at, how do we change cultures? We've changed the way we compensate. We've changed the way we do performance appraisals. And we've even changed and have much better engagement in the way we do our strategic planning. Just a few weeks into your tenure, you announced the first of what would become 84 recalls that affected 27 million cars in the United States. It's GM that's doing these recalls, but other car companies have increased the number of recalls too. I just wonder if you think 2015 is a new year, or have we seen the bulk of these recalls? Or is this a new way of doing business in the industry as regulators really clamp down and as the global supply chain consolidates? Well, I think you have to look at two different aspects going on that drove last year. One, as we learned the lesson of the problem that we found, we wanted to go make sure, and we went through our entire car park and really looked at vehicles that were manufactured in the late 90s. So that's how far we went back, which drove some of those numbers, because we really wanted to make sure, once we understood the issue, that we were comprehensive in looking at the vehicles on the road. I would say going forward, I think I will completely support doing a recall, because we're going to be focused on the customer. If we find an issue, but what you've seen now in the last four, five, six months is maybe the numbers have gone down, but what's more important is the number of vehicles. Because in addition, we put a lot of analytical tools. We're actually leveraging IBM Watson to make sure that when we see a bud of an issue where in the past we may have had to wait for more data to understand it, we're quickly finding it. And we're finding issues with recalls, several recalls, with less than 100 vehicles. So I'm not concerned. I mean, obviously, I want to get to a place where we have the safest vehicles and we're not doing recalls, and that's the changes that we've made to our development process. But as we see issues, we're going to take care of them. You know, you were the public face of this. You got out in front of everything that happened over the last year. What was the toughest moment for you? You know, I think, first of all, I was supported by a great team. And so I knew that there was a great group of people behind me, excuse me, that were supporting me. And then the other thing, every time I spoke publicly, I was also speaking to the men and women of General Motors. So I was not only talking to them, but representing them. So I really, you know, I took it as that. So I didn't, obviously, there was a personal impact, but I always knew that I was representing all those people who worked so hard every day for the company. OK. Let's talk about some of the issues that are in the news right now. Gas prices down significantly in the United States, down about 50% from where we saw just a year ago. What do you look at in terms of this? What does it mean for you and what consumers are looking for? Are they coming in looking for bigger trucks and SUVs right off the bat? Well, you know, it's really interesting because we are, you know, obviously, we want to respond to what customers want. So we're going to seize and love having a challenge of not having enough of a certain vehicle, whether it's a full-size SUVs or a truck. And we just launched a brand new mid-size truck, so we'll seize those opportunities. But long term, you know, it's been interesting being here because there are about as many people we have here, there's that many opinions of when it will change, when the price will change. It doesn't affect our long-term strategy because it's a much broader of what when we're looking at efficiency, fuel efficiency, electrification, because it's solving broader problems than just the cost of fuel, environmental congestion, et cetera, and across the globe. So we aren't changing our long-term strategy at all. Of course, you know, we're going to continue to sense and respond and learn as we all will. And then we'll be focused on meeting customers' needs in the short term, but not changing our longer-term development. The longer-term development in terms of the electric cars. Electric car and all efficiency, you know, starting with light-weighting, you know, we've done massive work on light-weighting vehicles, every component, electrification, you know, fuel efficiency across the board. How much of that is because of what governments have asked for or required, and how much of that is because you think it's what consumers want? You know, clearly, when you go across the globe, whether you're in Brazil or China or Europe or North America, you know, there's regulatory requirements and, you know, we're going to meet those and we want to do it as efficiently as possible because that's the way we think we can serve the customer and then meet not only what the customer wants and give them the choice of vehicles, but also meet the societal needs as well. So it is a two-prong. And, you know, the opportunity that we can have to have those come together, I think it benefits everyone. We have seen a lot of volatility in the markets. You look out at currency prices, you look at what the ECB did yesterday, and that creates some uncertainty. You've got a really good idea of what's happening with consumers around the globe. Where do we stand right now? Well, you know, in general, the consumer, when you look at it, a car or truck or crossover purchase for most people is the most important or second most important purchase that they make. And so if they start to feel uncertainty, you know, it's a decision, a purchase decision that they will back off on. What I've observed over the last couple years is the consumers around the globe are getting used to a higher level of, you know, I'll say uncertainty as global economic forces, but, you know, if the spikes get too wide, you know, it'll have an effect, and we definitely see it in the auto industry. You see sales pulling back because consumers are a little unnerved by what they see? You know, I think it's too soon with some of the issues right now. I mean, you know, when we look at the opportunity, there's still, we see growth opportunities in China, even if it's single digit as opposed to double digit. You know, in the US, there's, you know, good solid growth that we've had since the 08, 09 timeframe. In Europe, obviously a strong economy is gonna benefit the recovery that we have with the Opal brand. We've gained share for two years in a row. So, and I'm not saying that, I'm just saying as we move forward, if the volatility and the spikes, you know, continue, then at some point customers will say, well, this is higher than my new level of what I expect. What are your forecasts for Europe for this year? Because that's probably the biggest question on people's minds when you look at economies around the globe. You know, and we think the market relatively flatter or somewhat, a lot will depend on what happens. So we see it as fragile. You know, from a GM specific perspective, we have a very important launch of the Corsa that we just brought out at the end of last year. We have another important launch coming later in the year. So we'll hope to, whatever the market conditions are of the industry, to seize the opportunity of some pretty exciting new products. We have heard an awful lot about self-driving cars. That seems to be all the rage these days. And I will admit that it looks like a much more close to reality type of scenario than I would have thought even a year ago. What do you think about the future of autonomous driving cars? Well, I definitely think you can buy cars right now that have many, you know, I'll say driver assist features on the pathway to autonomous. So, and it creates value because it creates, you know, it's improved safety, whether it's stopping you if something happens and you're going, you know, there's going to be an accident from a front impact, you know, back the ability to see what, you know, an individual sitting in the driver's seat can't see lane detection, et cetera. And all those technologies are available today and on many of our products. As we look forward, we're, I think the first OEM, by next calendar year for 17 models, we're going to be putting V2V or vehicle to vehicle communications capability in the vehicle because for it to truly be successful over the longterm and you look at the infrastructures here, the road systems versus New York versus China, you know, you've got to have that communication ability with the infrastructure to have the safety level that I think we'll all want and require. But, you know, we're on that journey. We'll also next year for 17 model year, be actually putting out technology on an advanced Cadillac where you can take your hands off the wheel, feet off the pedals. You still need to stay engaged, but, you know, again, to experience it because part of the road to autonomous is also customer acceptance. So we believe in it. We're on that journey. We have many of the features right now. And in some cases we have a leadership position. The first mass autonomous car, is it going to be sold by GM or by Google? Remains to be seen, remains to be seen. When you say you can take your hands off and your feet off, but still have to pay attention, what does that mean? Can I be putting on my makeup while I'm doing this or reading a book? Probably. I think, you know, all the regulators and probably all the fellow drivers would prefer you don't. But I think it's just, you know, we want people to be alert because there still is, you know, the unexpected. It's one thing to be on a highway and even in stop and go traffic, the technology can adapt to that, but it's the unknown. So we still need that engagement. Frankly, the regulations require that. So, you know, we, I think, have a pretty innovative way to do that, which we'll be able to share next year. Next year? Yes. So it's really in the works. It's really cool. Oh yeah. If I was thinking about a car that I really could just have it drive me to work without a driver, not paying any attention to it, when do you think that actually hits? Is that five years down the road, 10 years, 15? We've spent time talking about that and actually had, you know, broader than the auto industry, many different industries that will be impacted. And, you know, our conclusion was no one knows. You know, I think we'll continue to see the journey though with the technology. It's the customer, it's governments coming together, it's infrastructure. So it's all gonna come together. And I think we'll see measurable progress each year. Here's a weird question for you. And I try and figure out what this means. If I have a self-driving car, do I still have to pay for car insurance? Well, if you, they were involved in the conversation as well. And if you look, there still is, you know, issues that happen from a car that are unrelated to driving, whether it's storm related, you know, theft, et cetera. So I think there's still gonna be the role of the consumer. But I think there's dimensions that will change. Yeah, I just wonder if the collision cost goes back to you as the manufacturer. Well, that's one of the things we're talking about right now. And, you know, how do we enable the technology and incent everyone? Because it's really a systems. I mean, I think the thing that you look at at transportation now to drive the efficiencies and the safety that we want, you've got to look at it from a systems perspective, even from an environmental perspective. It's a systems level. And so as we do that together, we can, I think, make it more efficient. While we're talking about technology, let's also talk about Uber and some of these ride sharing applications. I just wonder if you see that as a threat, as something that will keep younger people from buying cars down the road, and whether that, in turn, will affect auto sales overall. Well, you know, the way I look at it, and I've said publicly that, and we're working at it as a company, we think there's going to be more change in this industry in the next five to 10 years than there has been in the last 50. And, you know, as it relates to, you know, people making that choice to say, for this point of my life, for where I live, for what I do, do I need car ownership, or how do we drive that effectively? And so I think there's going to be a lot of change, but there's still, at the end of the day, going to be a need to get from point A to point B. And at General Motors, we plan on participating in it heavily and hopefully doing it in a way where we provide the most value that the customer, you know, selects the, you know, moves with us. Right. I mean, I just wonder, because we see so much of it in urban areas in particular, you see younger people moving back to cities, but you guys have had conversations about this too and thought about it? Oh, absolutely. Spent quite a bit of time on it. Again, you know, it's a very competitive area. The auto industry itself is an incredibly competitive industry, and now you're bringing in a lot of others. So, you know, it's something that we're working on, but not talking a lot externally. But then I think you also have to, you know, step out of the urban developed markets and look at the role of a vehicle in countries that, you know, developing countries, whether it's China, whether it's India, across the globe, and what that means to enable people to, you know, have work, education, you know, just provides advancement. So I also think it's gonna move at different paces, but also recognizing quite often, those that don't have it skip several generations. They don't go through the 30-year journey that they may jump quicker, but, you know, there's cost implications as well. Yeah, just a growing middle class in other places. Exactly. Kind of takes up some of the slack. Mary, with some of the technology, you guys have some pretty amazing things that you've been looking at, not just the self-driving cars. What are some of the other things that you think are really exciting that you're working on internally right now? Well, clearly, electrification. We just, last week was, in the US, was the International Auto Show, and we launched a new Volt. So for those of you who aren't familiar with the Volt, it's an extended range electric vehicle, meaning in the previous, you had about 40 miles of electric, and then backed up by a generator that ran on a full tank of gas, gave you a range of almost 400. As we look at the new Volt, we really listen to the customers, because we found, for the owners that bought the Volt, they're some of the most loyal and satisfied customers by external surveys. And so we listened intently to what they wanted in the next generation. So we've been, and also worked very hard on improving the technology. So we've taken costs out of the technology. We're providing a longer range of 500 miles, 500, excuse me, 50 miles, before you would go into using the gas from a generator perspective. Another vehicle that we're very excited about was a concept vehicle, was we called as a concept, the Volt. And it's a 200 mile electric vehicle. So really starting to get at the range anxiety that people have, because 200 really starts to put that issue aside. And then also with a, again, as a concept, a target starting price of $30,000, which starts to provide electric vehicles for the masses. Well, I mean, that's seen as clearly a competitor striking out at Tesla. What has Tesla meant for the competition today? Well, I think we have to step back and recognize that, you know, we were working on the Volt in the early 2000s and the battery technology brought that to market, you know, very innovative, continued, have invested heavily on developing the electrification technology. So, you know, clearly comes at it from an all electric perspective, but was a pathway we were on. I saw a post that you recently wrote on LinkedIn, just about how millennials are looking at something like 15 to 20 different jobs that they'll have over the course of their career. You're somebody who spent your whole career at GM. What can you tell some of these millennials? What advice would you give them in terms of what to take out of each of these jobs? Well, and I would say, you know, working for General Motors, which is a fairly large company, I feel like I've had many careers within. I mean, when you look at my career, I've, you know, I've worked in product development, I've worked in HR, I've worked in communications, ran an assembly plant. And so I feel like I've had many careers, happens to be within one company. But, you know, the advice I give to anyone is first of all, do what you're passionate about, because you're going to work hard and why not be happy and feel like you're making a difference. And then I'm a big believer in engaging people. I truly believe it leads to a bottom line performance. If you have an engaged workforce that feels valued, you're just going to have superior results. So those would be two quick things I would recommend. How would you gauge the employee morale at GM right now? You've been through a tumultuous year, but. Right, but again, that's where I'm so proud, because the power of the men and women of General Motors across the globe, and they send me emails all the time, and very supportive, but they're very proud of the direction we're taking. They want to be the safest automobile company. They want to make sure we're putting the customer in the center. So I think living through the difficulties this year has made the team more engaged. So I'm very proud of them. But I would also say on the very specifics that I'm giving the anecdotal, we do an external, or an internal, using an external tool, but we do an internal survey where we ask our employees, what's working, what's not, and we actively work on it, and we've seen substantial improvement. In fact, the outside group that does the survey for us said they, in the last two years, had not seen the level of improvement that we've generated at GM. So again, it's the power of the men and women of GM. What do they say you still need to work on? You know, I think they're still saying, from a career development, let's make sure, because again, why are people looking and projecting that we're going to see movement of 15 to 20 jobs, or in that range? Because they want to make sure they have career development, they want to have meaningful work, they want to, and I think a lot of it just is having good development conversations with the supervisor. So that was one of the number one things they told us, and over the last year, that's what we've really invested in and it's been training, it's been tools, but it's important, and so we look at it, we measure it, because engagement is so important. You pointed out that you've had maybe 12 or 15 different jobs at GM. One of those was engineering, some of that was product design. You've described yourself as a car girl before. Others have described me as a car girl. I usually say, I'm a person who loves vehicles, I'm a second generation General Motors employee. Yeah, my dad was a dye maker, so I grew up in the industry, grew up around cars. I think it's kind of in your blood, at least it is for me. It's not an industry for the weak at heart, but it is an incredibly exciting industry, because we do get to participate in what is a very important purchase for people, and what the vehicle means. I mean, many products you buy, you don't name, so it's exciting, so I love it. But it's a dynamic industry. So what car do you actually drive yourself right now? Well, one of the beauties of my job is I get to drive almost any car I'd like. So, I mean, again, when I look at it, and having spent my time in product development, I feel that each one had a specific role in the portfolio for their target customer, whether you're talking about a Chevrolet Spark, all the way up to the Cadillac CTS, which I think is one of the most advanced vehicles we've ever done. And we've gotten a lot of external recognition for the technical capability of that vehicle. I also like driving trucks and SUVs. So, like I said, that's one of the benefits of this job. And so, from a person who loves vehicles, it's a perfect match. I understand that. We love all our children equally, but what's sitting in your driveway? All right, very good. You know, my husband and I have always been a Camaro fan, so I love the Camaro. I think between my husband and I, we've owned each generation. We have one right now. And then, just being a working mother with two teenagers, I love an Escalade, kind of like Escalade. It's like my working office. So, I would say those are the two that I spend most of my time in. You know, how has your life changed over this last year? Because, again, being in the top position gives you a very different perspective of the company, and it puts a lot more demands on your time, I'm sure, too. But how's your life different today than, let's say, a year and a half ago? I think it's, you know, we've been busy because General Motors has been on a path to make substantial change in the last five years. So, it's just, you're working on different things. I would say the role, in the CEO role, it's much more of making sure, setting the strategy, and then also spending time with external stakeholders so they understand where you're going, whether it's our suppliers, our dealers, our investors, our owners. And so, spending that time with diverse groups to make sure they understand where General Motors is going, and they choose, in whatever relationship they have with us, to be a partner. And then, going through the global operations in a different capacity as well. So, I would say it's more the spending time with external stakeholders and partners. What's caught you by surprise in terms of things that you're doing that you didn't expect, or things you're not doing that you thought would take up more of your time? I think, you know, I wouldn't say it surprised me, but as I got into it, of just the importance of having strong relationships, you know, with, again, our suppliers, with our investors, our owners, with the media. So, because again, you're such an important part of helping everybody understand where we're going. And so, I think just, it was reinforced to me how important that is, and that it's very important to spend the time. Some of the things that you've told some of those constituencies recently have been talking about what you're planning on spending. You're putting an extra 20% into capital expenditures, I think, raising it to $9 billion. Where is that money gonna go? Well, if you look at it, all the technology and the fact that I've indicated that over the next five to 10 years, I think the industry will change more in the last 50, that doesn't happen for free. And so, you know, whether it's more efficient, power trains, new design, new vehicles. I mean, some of that is going into new segments, also investing into new markets. And so, it's not only technology, but opportunities to improve the operations to reach new customers. So, it's really a blend of all of that. In terms of a goal that you have for 2015, a personal goal, maybe, and a goal for the company, what would those be? Well, we're on a journey. I mean, we have very specific targets, interim targets that we've set for next year. I mean, our longer term, early next decade, is we wanna be known as the most valued automotive company by all of our stakeholders, starting with our owners, our investors. And so, we have important milestones to achieve this year. Next year, they're public of just demonstrating that performance. So, I would say, the goals that I have for this year are to continue to have strong performance, quarter after quarter, to have an important year as we move toward that vision. Also, to engage employees and make sure we're focused and looking at where the industry's going, not where it's been. And if you had one thing, in hindsight, that maybe you could do differently since you've been in the job, what would it be? Well, obviously, I don't know. The struggles and the issues that we had last year, if I could erase those and turn back the clock and not have that happen, because it did have a tragic impact on folks, that would probably be the number one thing I wish I could undo. From my behavior and the challenges that we faced last year, I'm proud of the fact that we really focused on the customer and the transparency, because I think it allowed for faster resolution. We didn't do everything perfectly, but we adjusted quickly. Where do you stand with that issue right now? Where, you just had to give an update to shareholders, to employees. What would you be telling them right now, about where that stands? Well, again, as we looked, we've really done innovative things to get those customers back in. So we're running ahead of, General Motors always was pretty responsive of getting once we needed to have a vehicle in to have something serviced or fixed, a very good performance. And we've taken that to a new level of really engaging. So I'm proud of that. I'm proud of the changes that we've made in the system to improve as we go forward. I mean, those are the main two things. And then again, being very responsive to those who were impacted. And we're still working through that with the Fiber program. I know this is your first time at Davos. And I just wonder what you think about your experience here so far. You know, it's been outstanding. I mean, I think the opportunity to meet so many people, to meet people that you've been wanting, you've emailed, you've talked to, but to get to have those face-to-face interactions because it's very efficient perspective. Then also the different meetings and forums I've been in, I think, again, really high quality discussions. So I think it's an important place for General Motors to be a part of, to help, you know, to learn, to listen, to understand, to have others' perspectives and then to have a voice as well. And Mary, just when you look at the competition around the globe, who would you consider your biggest competitor right now? You know, as I look at the main global players in the auto industry, I don't dismiss any of them. I think they're all very capable. You look at the quality of vehicles, where they're headed, technology. So I don't single out one or two. I have tremendous respect for many of them. Also though, there's other, you know, non-traditional OEMs that are into this space as well. You know, as you mentioned, the Googles, Uber, et cetera. And so, you know, I think again, that's why this industry is so dynamic is not only it's a very capable competitive set, but there's other industries looking for how do they participate, especially as you see the consumer electronics type of industry moving into the vehicle. Because it provides customer value. Yeah, the Apples of the world, the Googles of the world, are they companies that you consider people that you work with or are they considered competitors at this point? Well, again, I think we do both. You know, I think we, you know, work with them and have important projects. And, you know, I think if we have strong partnerships and we define the role, there's an opportunity to work together well. But obviously, you know, they've got their, you know, business plans and agendas as well. And so in some cases that puts us as a competitor. But I think even you see that in the auto industry, there's a lot of alliance and partnerships, but then there's times where we're, you know, directly competing. And so you've just got to be able to live in that world. All right. Well, Mary, I want to thank you very much for your time today. I'd like to thank the audience for being here. We really appreciate it. Thanks everyone. Appreciate it. Thanks Becky. Thank you.