For Dan Akerson, a Magic Moment to Remake GM

Freed of contract and dealer franchise constraints, the CEO tries building cars that buyers want

Akerson, a Detroit outsider, wants more consumer input on GM's cars Andrew Harrer/Bloomberg

By David Welch

For much of the past quarter-century, senior managers at General Motors (GM) spent a lot of their time worrying about almost everything but their customers. The automaker's cars were sometimes designed to fit the capabilities of its manufacturing plants, or simply to give its dealers something to sell. Its heavy debt load and rising health-care costs meant it had to be managed to maximize cash, rather than the long-term equity of its brands. And GM's labor contracts all but prohibited layoffs—even if car buyers didn't want the heavily discounted products those surplus workers churned out.

No longer. GM's 2009 bankruptcy and subsequent restructuring allowed it to shed many of the contractual and financial obligations that weighed it down. That's given new Chief Executive Officer Daniel F. Akerson a window to do something radical, at least by GM standards: focus on customers. The automaker is free to design cars that appeal to consumers. It can restrain production to get better pricing. And the slimmed-down company now has money to crank out new models faster and expand the advertising it puts behind them. Akerson "talks about this being a rare opportunity and the fact that we have momentum," says Joel Ewanick, GM's newly named global chief marketing officer, a position 102-year-old GM has never had. "Dan finds it very important that we become consumer-centric and make the company more of a marketing organization."

Akerson's first major change since finishing GM's initial public offering in November has been elevating marketing within management. Most significantly, he put Ewanick, who earlier in his career made a name for himself building Hyundai's brand in the U.S., on GM's executive committee with a new mandate: bring a consumer point of view into GM's product planning and strategic decisions.

"The importance of marketing is radically different within GM than it was under past leadership," says James N. Hall, principal of consulting firm 2953 Analytics. "Before, marketing was not involved in product decisions. It was 'here's your car, go and sell it.' "

Akerson's move was more than just another reshuffling at a company that has gone through four CEOs in less than two years. The former telecom executive and private equity partner is trying to get historically inward-looking GM to find more effective ways to talk to consumers and to accommodate their input before making decisions. Building cars people want to buy rather than what it needs to sell is a huge turnabout for GM. "We want to eliminate insularity," Akerson told analysts on Jan. 11. "We have to benchmark off the competition, not what we see from an internal perspective."

Akerson has been telling his staff that the time is particularly opportune for big change at GM because the automaker's profits are finally rising, and some new models, such as the Chevy Equinox and Cadillac SRX, have become hits. GM in 2010 logged its first profit in six years. The company's overall market share is down because the company hasn't recouped all of the customers it lost by shedding its Hummer, Pontiac, Saab, and Saturn lines. But its four remaining brands—Chevrolet, Buick, Cadillac, and GMC—grabbed 19 percent of the U.S. car market last year, up from a combined 17.2 percent in 2009.

GM still has a long way to go. Only 23 percent of U.S. car shoppers even considered the Chevrolet brand, which accounts for 70 percent of GM sales, according to a survey done in late 2010 by market researcher Strategic Vision. The brand has been stuck around that mark for five years. Despite being dogged by quality problems, Toyota (TM) gets nearly twice that level of consideration from shoppers. And Hyundai has tripled its consideration percentage to 17 percent since 2005, in part a result of Ewanick's work there.