InMarket: Fixing the Giant

By Robert Francis 

 

Ed Whitacre seems like a guy you could sit across from at the late, great Massey’s and discuss where to find the best chicken-fried steak.

The Ennis, Texas native retains his small-town Texas roots, his Texas twang and, as my grandmother used to day, “doesn’t put on any airs.”

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Not Ed. He doesn’t put on ‘airs’ though he could. No doubt when the history of business the late 20th and early 21st century is written, Ed will have his place. And more than a footnote.  Whitacre spoke at Texas Christian University last week at the Tandy Executive Speaker Series. He has a book out, with Leslie Cauley, titled:  American Turnaround: Reinventing AT&T and GM and the Way We Do Business in the USA.

Yeah, Ed’s career has been an adventure. As chairman and CEO of AT&T, he and his team turned the smallest of the ‘Baby Bells,’ Southwestern Bell, into the largest, AT&T. He did that in the midst of the turmoil of deregulation, the growth of cell phones and more than a little industry upheaval.

A side note on the cell phones. Whitacre said that Bell Labs, the AT&T research arm, predicted that the market for cells phones in the U.S. was about 1 million customers.

“Now AT&T sells more than that in one day,” he said. 

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His stint at AT&T done, Whitacre entered retirement. That is, until he received a call in 2009 to serve his country. Not by enlisting in the Marines, that would have been too easy. No, he was charged with fixing one of the most important companies in American history: General Motors.

At the time GM was a “beater” as we used to call old cars that were limping, chugging and backfiring their way towards the junkyard. The carmaker limped into the last recession and finally, declared bankruptcy, holding up one of those signs like someone on a street corner, “Will make mediocre, uninspiring cars for food.”

 Whitacre at first refused the offer. He was asked again and refused again, but eventually wearing down when he was told GM needed someone who didn’t know the car business. “That would be me,” he said.

At GM, Whitacre found an organization with a culture that seemed oblivious to the disaster spinning around them. Their attitude seemed to be, according to Whitacre, “Let’s just make what we’ve always made and we’ll get by O.K.”

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No one in the company had an organizational chart, many workers reported to three or more bosses and the human resources department had been eliminated to save money, Whitacre said. In other words it was chaos.

A big believer in “doing right by people,” Whitacre early on paid a visit to Solidarity House, the United Auto Workers headquarters in Detroit. The UAW leadership said “I was the first guy from GM management to be in the building,” Whitacre said.

Unlike many in business who disparage unions, Whitacre said he couldn’t have turned GM around without their help. “I give the unions a lot of credit,” he said. “We had our disagreements, but they knew we had to turn GM around and quickly.”

Whitacre said he follows four principals when leading a company.

• Follow your vision as CEO

• Be able to quickly change tactics and “turn on a dime”

• Be a risk taker

• “Do right by your people”

That last principle is particularly important to him and, he says, should be to all leaders of companies, organizations and government entities.

“If you’re not right with the people in your company, you will fail. It may not happen tomorrow, it may not happen in three months, but it is inevitable. You will fail,” he said.

A questioner asked whether it was right for the government to “save” GM. Whitacre said the bailout saved millions of jobs, not just at GM, but also from the thousands of GM suppliers.

“It was the right thing for the government to do. You had to bail out GM,” he said.

Too bad Ed was busy saving GM.

If he had been available to save Massey’s we might still have some of their best chicken-fried steak right here in town.  

 

In Market is a column written from the perspective of a plugged-in business journalist about business happenings in and around Tarrant County. Got an idea for In Market? Robert Francis can be reached at rfrancis@bizpress.net.