Henderson's Strategy to Fix GM

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Henderson may ditch one managerial bottleneck, a star chamber known as the Automotive Strategy Board. Its 16 members decide where money is spent, what strategy every business unit should take, and who gets promoted. Traditionally, the group has convened monthly. So if the automaker needed to make big calls like cutting checks for a new car or slashing production, those decisions languished until meeting time. GM insiders say Henderson may replace the strategy board with smaller teams that meet weekly and make decisions further down in the company.

Culture of Fear

Henderson has been careful not to criticize Wagoner. But he has begun dismantling some of his mentor's initiatives. Wagoner was a data geek who used nearly 10 metrics to measure his executives' performance. Not all were particularly relevant. Henderson says he has boiled those down to the five most vital for each department, with a much bigger emphasis on sales and profits. Under Wagoner, people were focused on minute details that meant more to their own departments than the overall company. "We got a little crazy with metrics," says Chris Oster, GM's organizational czar.

So far so good. But is Henderson willing to do what it takes? GM's new chief restructuring officer, Al Koch, previously advised the company as a consultant and has an outsider's perspective. "Fritz is more hands-on in enforcing decisions than Rick was," he says. But old habits endure. In a June 1 blog post to employees, Henderson asked for suggestions and criticism. Several workers said people are afraid of challenging the status quo. When pressed in an interview on the culture of fear, Henderson said he gets criticism all the time, and then added: "I've never had a situation where people were afraid to speak up." Maybe so, but that doesn't mean managers further down won't discourage new ideas from their underlings.

Henderson also says GM's product planning group is just fine. Yet it has routinely missed major trends and rarely sets them. GM's top-selling Chevrolet division, for example, is just this year launching decent crossover SUVs; rivals have been selling them for years. Plus, the product planners' indecisiveness has led to many delays on new programs. It's not that GM's designers and engineers can't work fast. They often wait for the "numbers dummies," as GM product adviser Robert A. Lutz calls them, to hash over the research. By the time the green light comes on, GM has missed the moment.

Fixing that is one of Henderson's biggest tasks. Lutz, the company's maverick-in-chief, is scheduled to retire at yearend. He's the one who did an end run around or bulldozed over the bureaucracy, says James N. Hall, principal of 2953 Analytics, a Detroit-area consulting firm. But Lutz never created a formal system that will replace his product savvy when he retires. That, say GM insiders, is why Lutz may stay on past his Dec. 31 departure date.

Either way, Henderson will have to make the product planning group— GM's most vital department—work faster and read the market better. He'll also have to prove wrong the critics who think GM needs not a company man as CEO but an outsider like Ford's (F) Alan R. Mulally. Right now it's fair to say that Henderson is moving faster than his predecessor, the incrementalist Wagoner. For the foreseeable future, his fate will rest in the hands of government minders who expect dramatic results—and quickly.

Return to the General Motors' New Landscape Special Report Table of Contents

Welch is BusinessWeek's Detroit bureau chief.

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