CFO Says The Biggest Hurdle Might Be Habits And Culture Of The Old GM

The new General Motors Co. is fighting a very old battle.

Its name is complacency, the traditional by-product of solid profits, growing cash flow and the Detroit tendency to relax in good times. Managing it successfully will be the difference between a sustainable turnaround with credibility on Wall Street or the missed opportunity of a taxpayer-financed bailout that stalls under the weight of bad habits and mediocrity.

“The evidence will be in the results we deliver,” GM CFO Dan Ammann told The Detroit News Tuesday. “We have to have a very strong financial foundation to the company. And that’s very different from where we were a short time ago. We all understand what happened in the past and we want to make sure it doesn’t happen again.”

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TheSteve - 7/10/2013 3:48:54 PM

+2 Boost

Ya think?

Bill Gates (while he was still heading Microsoft) was asked in an interview how Microsoft got to be the world leader in PC software. His reply (paraphrased by me): "Each day, we behave as though Apple was about to kill us." As a byproduct of this mindset, Microsoft got really good at attaining and maintaining market share, and staying consistently profitable, in spite of creating uninspiring and some arguably crappy products.

No so for GM (aside from creating uninspiring and some arguably crappy products). GM doesn't need to adopt a survivalist mindset because they have a safety net in the form of the Federal Government. When GM messes up again, the feds will simply throw billions of dollars at them again, and then tell us they had to, or else things would be Really Bad™ if they didn't.

When a significant majority of tax-payers (i.e., voters) believe that it's best to let a failing GM go Chapter 11, then the government will reflect the will of the people and let it be so. GM execs, on the other hand, could never make another cent of employment income, and continue to live a life of luxury from their net worth and investments, so they won't be motivated by this shift in popular thinking.