It’s a place no CEO wants to be.
Committee members were on the offensive, trying to uncover what it was about the corporate culture at General Motors that allowed this to happen. An exchange with Rep. Joe Barton, R-Texas, cut to the heart of the matter.
“Why in the world would a company with the stellar reputation of General Motors purchase a part that did not meet its own specifications?” Barton asked.
Barra’s response: “I want to know that as much as you do. It is not the way we do business today. It is not the way we want to design and engineer vehicles for our customers.”
Later, Barra added that “whatever mistakes were made in the past, we will not shirk from our responsibilities now and in the future. Today’s GM will do the right thing.”
And so went Barra’s strategy–repeatedly asserting that the culture of GM was changing from one where the primary focus was cutting costs, to one where the primary focus is the customer.
“The customer and their safety are at the center of everything we do,” Barra said.
“All I can tell you,” she said, “is (at) today’s General Motors, we are focused on safety.”
It may have sounded good, but some wondered if Barra was simply saying what members of Congress wanted to hear.
GM announced Friday that it had entered into a consent decree with the government that will see the automotive giant pay a $35 million fine and agree to “unprecedented oversight requirements.” The deal covers GM’s “failure to report a safety defect … in a timely manner” and requires it to give investigators full access to the results of its internal probe into the recalls.
Supporters of GM and Barra see a company that made some bad moves in the mid-2000’s before ultimately going into bankruptcy, during which time it started to clean up its act.
Critics, however, scoff and see the “new GM” as an extension of the “old GM.”
To most, changing those opinions comes down to one central question: Can Barra transform General Motors into an improved, more responsive automaker?
“I think Mary can change GM,” says Dave Cole, who used to run the Center for Automotive Research. “She has already started changing GM.”
Cole says Barra deserves credit for creating a head of safety position and appointing a veteran of GM, Jeff Boyer, to the job.
But to understand why GM failed to address major safety problems, experts say, one has to examine the culture at the automaker long before Barra became CEO, and look at the possible link between cost-cutting and quality.
“It was a company that in the modern history of General Motors was always dominated by bean counters,” said Maryann Keller, an auto analyst for four decades who has written two books on GM. “And bean counters had only one objective and that is make the numbers, at all cost. And sometimes at the sacrifice of things like quality.”
Read More GM’s Barra ‘stonewalled’: Lawmaker
Keller, however, said she believes that there wasn’t likely a callous disregard for safety at the company.
“I don’t know that there was a conscious, … ‘We’re not going to care about safety’ anything,” she said. “That would be … beyond the criticism that I would level against them.”
It is widely accepted that GM has been hyper-focused on costs—squeezing suppliers to get as much as it could but paying as little as possible. It may be a sound business approach, but it created an environment that provides a useful context when examining how GM might have gotten into trouble with the ignition switch.
There’s a thought taking hold in Detroit that Barra is the GM version of Alan Mulally, who turned around Ford by changing the culture of the automaker.
Before Mulally became CEO, Ford’s culture was filled with bickering and groups of executives protecting their turf. Mulally, acting almost as a head coach, pushed and prodded executives to focus on building cars and trucks that customers want.
Now, Barra is trying to use the same approach at General Motors. And like Mulally, Barra is an engineer who has a track record of building teams, not dictating orders.
Cole said he believes GM’s culture is ripe to be molded by a head coach after years of being ruled by kings.
“The management at GM has the desire to be coached, and Mary is ready to lead the team,” Cole said. “Mary believes everyone inside GM is important, and that will filter through the company. There are talented people in GM ready to follow her lead.”
Keller, who has often been highly critical of GM, said she thinks Barra can transform GM’s culture. How?
“If she can use this as a seminal moment to convince everybody that this really is a company where everybody has to take individual responsibility, and most importantly, will be held accountable,” Keller said.
The fact remains, however, that GM is packed with thousands of workers who were hired and worked in a culture where making numbers every quarter was the main focus.
Getting those workers, the core of GM, to focus first on the customer won’t be easy, analysts say.
“The GM culture was stifling because people didn’t talk to each other. They kept silent,” Keller said. “They didn’t transmit bad news because they understood what the reception was going to be to the bad news.”
CNBC tells the story of one of America’s most iconic companies, now in the throes of a deepening crisis. Watch Investigating GM: Failure to Recall on May 18 at 10 p.m. ET / PT on CNBC.