CEO Series: Mary Barra of General Motors on Committing to an Eco-Friendly Future | HBR IdeaCast

0:10Welcome to the HBR IdeaCast from Harvard Business Review. I'm Alison Beard.

0:22On this show for nearly 800 episodes now, we've aimed to bring you the most cutting-edge ideas in business, management, and leadership in ways you can understand them. And while we gain so much insight from researchers and academics, those who study business, we also learn a whole lot from practitioners, the people in the trenches building and running companies. This month, we wanted to bring you a series of interviews with some of the world's leading current and former CEOs to hear their perspectives on their most important challenges and aspirations. Look for a new special episode of this IdeaCast CEO series dropping in your feed each Thursday in May.

0:58To start, we'll hear from Mary Barra, the CEO of Automaker General Motors. We invited her to our recent virtual conference, HBR Live Leaders Who Make a Difference, to talk about her commitment to a future full of electric vehicles. She was interviewed by Amy Bernstein, the editor of our magazine. We hope you enjoy the conversation.

1:31Amy Bernstein:Hello, I'm Amy Bernstein, and I'm the editor of Harvard Business Review. I'm thrilled to be here today with Mary Barrett, the CEO of General Motors. Mary rose through the ranks of GM to become its CEO in 2014 and its chairman in 2016. The first female CEO of a major automaker, she previously served as the Executive Vice President of Global Product Development, Purchasing, and Supply Chain at General Motors. Mary has long spoken of an all-electric future for GM. And in January, she made the kind of startling announcement that GM would completely phase out vehicles using internal combustion engines by 2035 and will also go completely carbon neutral at all facilities worldwide, also by 2035.

2:28Amy Bernstein:I want to get into that with you today, Mary. How are you going to go all electric in just 14 years? Talk us through that. Well, we already have a lot of learnings from an EV future perspective with the Chevrolet Bolt EV and now the Chevrolet Bolt EUV. And we've announced that we're going to be, we're investing$27 billion dollars between now and 2025 to have 30 EV models globally in about two-thirds of those in the United States. And so when we look at projecting the future, that's what allowed us to say that's our aspiration to have all of our light-duty vehicles be all electric by 2035, the vehicles that we're selling.

3:11There's much that needs to happen, but we have to set ambitious goals because we believe in the science. We believe that we need to do the right thing for the environment. And we believe now we have the technology and with the platform we've developed that we can talk more about, we can have a full range of vehicles so everyone has access to an EV. And we can do it in a way where customers are excited about moving to EVs because some of the issues that they worry about, whether it's range, whether it's charging, whether it's having the right functionality of the vehicle, Those are all things we're very confident that either on our own, like the right vehicle or working with many others, including the federal government on the appropriate EV charging infrastructure.

3:52Those are all things that we can accomplish in that period of time.

3:55Amy Bernstein:This is a big, hairy, audacious goal. And change of this magnitude at a company as complex as General Motors has got to be daunting. I'm wondering, first of all, have you run into any resistance anywhere among any of your stakeholders? Well, I think this is something we've been working on for a while. We announced it, you know, this year in our intention. It actually started last fall with an investor conference that we participated in. We started to lay out the framework. But it's actually something we've been working on for years, especially when you look at the Altium platform that is the foundation for our electric vehicles, that is really set up as a building block, kind of a, we can configure it, leveraging the same cells and building blocks to do a wide portfolio of vehicles.

4:44And then we have very strong brands. We have the highest loyalty in the industry in the United States. And we also have very high customer sales and service satisfaction. So that relationship that we have with the customer, we think is very important as well. So the work's been going on for years. and people believe in the mission. It was a couple of years ago that we put out our vision for the company to create a world with zero crashes, zero emissions and zero congestion. And frankly, our employees are excited about that and they wanna be part of it because they wanna make sure not only working for a company that's doing the right thing, but it's doing the right thing for the environment, for safety, not only for their children, but for their children's children.

5:26Amy Bernstein:So, you know, we often write about, we publish a lot on the role of purpose and galvanizing an organization. And it sounded like you were sort of getting close to that topic. Can you talk about purpose at GM and how you have articulated it and kind of inculcated the organization with it? Well, what I talked about with our zero crashes, zero emissions, zero congestion is our vision. And we're actually actively engaging our employees to make sure the purpose that we feel we're delivering as part of this transformation and that we're going to be committed to and be our North Star, that everyone is bought in.

6:03So it's an iterative process right now that I'm really excited about. So you'll hear more about GM's specific purpose as we go forward, but it will be built on creating a wonderful customer experience and connecting people and achieving our vision of zero crashes, zero emissions, and zero congestion. And I think purpose is so important for companies and for employees. Most people don't realize with General Motors, since we're over 100 years old, but today, about 40 % of our employees have been with the company, our salary employees have been with the company for less than five years. And they've joined because they believe in the vision and they want to be a part of it.

6:44Amy Bernstein:You just mentioned an iterative process. Can you take us into that iterative process? I mean, Culture change is such a, it's an almost impossible task for so many organizations. How are you doing it? Well, when I really look at culture, I think our culture work started before I was in this role of really focusing on the customer, focusing on the relationships with all of our stakeholders and focused on excellence. And those were the values that we outlined in the 2013 timeframe. And so as we started to live them, because it's not what you write on paper and put on a poster on a wall. It's how do you live those?

7:25And obviously, in 2014, we had some challenges with the ignition switch recall. And we demonstrated that we were going to live our values and we were going to do the right thing, even when it's hard. And that really, I think, started to change our culture. And then something very important, about twice a year, pre-pandemic, we would get our senior leaders, now about 230 people from around the world together. In that very first meeting we had as Iowa CEO in the fall of 2014, we asked everybody if we could improve the company, improve the culture, what would be one behavior we would change? And we had everyone submit their answers.

8:04And it really boiled down to about five or six things that became our behaviors. And so we first lived with them. And that next day I saw change because it's hard to say, you know, the culture you want to have. You can define that. But how do you get there? And my strong belief is you get there by how you behave every day, because the way you behave every day really defines what the culture is. Do people leave work and say, I have a great day. I'm working for a company that's working toward a very important vision or mission or purpose, and I feel good about it? Or do they go home every day and they're frustrated?

8:41Because the culture is the stories people tell about what it's like to work there. And so as we started to hold each other as senior leaders accountable to live those behaviors every day and consistent with our values, that started to change our culture. Then we rolled them out to every employee in the company. Our compensation system is linked to demonstrating those behaviors. Our recognition system is linked to say, I want to recognize somebody for being bold or looking over the horizon or thinking customer. And it's really allowed us to, I think, start to make a very important cultural transformation.

9:20We're not there yet. I don't know if we'll ever be there yet of what we want to be. But we know what we're moving to. It's clearly communicated. And it frankly gets reinforced every day.

9:31Amy Bernstein:So it sounds as if you have reoriented this entire complicated, sprawling organization toward a set of behaviors, a defined set of behaviors. It sounds like being bold is one of them, being customer-centric might be another. Maybe you can share some of the others. And then you aligned all of your processes against these behaviors. Is that the way it's going? Yeah, I would say, again, because we have to live those behaviors, because we all agreed if we live these behaviors, we would be creating the culture we want to have. And to reinforce that, even though we had talked about inclusion, we actually explicitly added a behavior last year called be inclusive.

10:15And it's really, you know, allowing or asking people to value different opinions, different than their own ideas on an everyday basis. And so now that becomes something that we can recognize people when they do. And again, our behaviors have become something very important that our employees, because we linked it to different processes within the company, they know it's really important and it's clear. And I think when you're transparent and consistent, the team members across the globe will rally around it. And, you know, I think it provides a good roadmap.

10:52Amy Bernstein:So you have spoken in the past about the importance of winning the hearts and minds of people. the people who you work with every day. And that's clearly at the core of this culture change that you're driving. How do you win the hearts and minds of the people at General Motors? I think one very important thing is to communicate and then communicate and then communicate. And it's not just what you want someone to do, but it's the why. Because frankly, when you communicate, hey, here's what we're trying to accomplish. Let's all work and be aligned for that mission. And you also unleash creativity and innovation because people say, OK, instead of just saying do this, it's we're trying to get this.

11:38We get everyone thinking about how can we do that even better and get the best ideas from everyone. And so I think that is a very, very important piece of it. And back to inclusivity.

11:51Amy Bernstein:Right, right. Because good ideas come from everywhere. That's absolutely what we believe. Dave, you have said that your goal is to make GM a technology company, even more than a car company. Talk about what you mean by that. Well, first of all, when you think of an automobile, a vehicle that we're putting into the public today or a customer is buying, it generally has 30 ,000 parts and has hundreds of millions of lines of code. So and it's got to be integrated. And it's something that lasts the average age of a vehicle on the road today is between 11 and 12 years. And so when you think about that, I think that kind of defines technology of of what we're doing.

12:35And especially with all of the services on top of it being a transportation mechanism to get you from point A to point B. Think about everything you can do in your car from a connectivity perspective, from, you know, getting information about the vehicle. And we're leveraging all of that to provide a better customer experience and also an overall ownership experience. So when I look at that, I look at we've transformed the company with the number of software engineers we have and the number of IT professionals that we have. So we're very much already, I would say, transitioned. You know, we still do very important hardware, but also the software grows more and more each year.

13:16Over the last five years, we brought a lot of that work internally because we knew it was so important to control and to integrate. And so that's what when I look at it, and I'm an electrical engineer by degree, you know, I think it is definitely a technology company and serving a very important function for people because moving people from point A to point B, mobility represents freedom.

13:40Amy Bernstein:We asked our audience to submit questions, and I'd love to ask you several of them because they're good ones. How will autonomous vehicles change the auto industry landscape over the next few years? Well, I think this is some of the most important technology. Dan Ammon, who's our CEO of Cruise, talks about it being the technological challenge of our generation. And it's so important because I think it can solve a lot of issues. first of all, is safety. And when we look at and analyze crash data, especially fatality data in this country alone, 90 % of it is caused by human error. And so an autonomous vehicle that's designed and executed safely, and that's our standard, it's got to be safer than a human driver.

14:25It follows all traffic laws and rules. It doesn't drive impaired or distracted, and it doesn't speed. And so, you know, there's a lot of opportunity to improve the way we move from a safety perspective. And then second, think about cities. And right now in the United States, there are three parking spots for every vehicle, non-residential parking for every vehicle. Think about how cities can transform over time if we need less parking, because autonomous vehicles can move about in a different pattern and we can move goods in a different pattern. So we think autonomous is very important to our zero crashes and we believe all AVs should be electric vehicles.

15:13So then they become zero emissions and executed well and implemented in partnership with communities and urban planners. We definitely believe we can reduce congestion. So I think it's a very, very important part of our future.

15:27Amy Bernstein:So you just mentioned those critical partnerships. You mentioned communities and urban planners. Earlier you talked about in regard to electric vehicles, working with governments. How do you work with government to drive a change as sweeping as the one you see? What do you do now and what needs to change in the way organizations work with government? it? Well, I think governments around the globe at the local level or at, you know, as we define the federal level, it's very important to have a relationship. And I think it's about problem solving and it's about innovating to find solutions that create win-wins for both.

16:10Because if you think about in a dense urban environment, say New York City or San Francisco, no one enjoys that delivery van that is double or triple parked with packages all over the street. and there's just a person there trying to do their very best to move goods to help keep the city running. If we can find solutions that improve that, and that's so improve safety, improve the environment, improve the living experience and solve real issues, I think that's the way that you partner and move forward. But it's about having regular dialogue and creating relationships based on trust.

16:45Amy Bernstein:Well, another relationship that GM has and has had for many, many years is with the unions. Our audience asks this question. The auto industry has a history of strong unions. How have you approached working with the UAW? And do you believe that unionization and other industries could help them move more quickly transition to business models that prioritize employee welfare? Well, when I look at, I think, you know, we have a very productive relationship with our unions around the world, specifically in the U.S. is with the UAW. I have regular meetings with the UAW president and the person who's the vice president for the GM department.

17:29And a lot of our meetings are about problem solving. How do we do the right thing for everybody? How do we find solutions? One of our number one priorities that we work jointly is on safety. And that's, you know, what we call safety is an overriding priority for the company. And, you know, as we lived through the pandemic last year, that was our number one goal. We wanted to keep not only our employees safe, but our customers safe. And so having that foundation and then working together to how do we improve quality, how do we continue to make our operations more productive because we're in a competitive industry and I don't think there's any non-competitive industries, I think has been important.

18:06So I think the way that we work together, I think there's a lot of problems that we can tackle and be better. You know, my dad was a UAW member because he worked for General Motors for 39 years as a dye maker. And I think we can have a very constructive relationship, partner to solve a lot of issues and grow, you know, grow jobs and frankly do it in a way that allows our company to prosper and grow as well.

18:31Amy Bernstein:Right. How did the COVID-19 pandemic affect your business? what were some of the goals you had pre-pandemic that had to change because of it? And how did you manage those changes? Well, first, as I mentioned, when we understood, we started to understand what was happening with COVID because of our operations in China and then Korea. So as we saw that, you know, we were sharing lessons and talking daily, multiple times a day to understand, because remember, we all were, you know, in this early, early stages trying to understand what was really happening. And so we worked and took the learnings from around the globe to find ways to first protect our workers.

19:13And in many cases, we suspended production and suspended operations, although our people, you know, for those who could work from home, did tremendous, incredible work from home and found creative solutions to things that I wasn't sure we were going to be able to do as effectively as we did. But we first focused on making sure people were safe and how they could safely return to work because it's about lives and livelihoods. And our team understood that. Then we wanted to make sure our customers were safe and that we were supporting them because a vehicle was so important, again, during many phases of the pandemic.

19:48But then we wanted to make sure the company was secure from a balance sheet perspective. And so we focused on that. But then as we quickly were able to make sure we had good plans and we're protecting our people and the company, we started to look at the opportunities to accelerate our transformation. And during this period of time, we accelerated our electric vehicle programs. We even, with the progress that we had made on the Altium platform, which I talked about as the foundation for our next generation of electric vehicles that will start rolling out this year with the GMC Hummer EV, we were able to find ways that we could speed up the actual program execution to get vehicles in market faster.

20:32From working with our dealerships and our partner dealers, we were able to accelerate the way that we do transactions online. We have a tool called ShopClickDrive, and our dealers quickly saw, hey, we need to do even more online to continue to provide vehicles to our customers during the pandemic, that accelerated. So, you know, my biggest takeaway from the learnings of the pandemic, we were able to accelerate how we're transforming. And I think we saw that in many industries, what we thought would take five years, we got done in five months. But we also, I think, proved to ourselves and gained confidence that we can move quickly and we can tackle issues innovatively by empowering people and getting out of their way, they're going to get the job done.

21:18And they're going to figure out ways that you couldn't figure out sitting in a room or sitting, you know, with 30 people on a Zoom, just let people know what we're trying to do and why and set them free to get it done. And they did amazing work.

21:31Amy Bernstein:So it sounds as if the pandemic also kind of forced you to trust your employees a little bit more. I think I've always trusted our employees. I mean, when people ask me, you know, what kind of makes GM, it's our people. Our people are incredible. I really think we have the best team on the field and they accomplished and tackled tasks in a way that is just amazing. But I think it was really empowering them. It was saying, you know what, I know you're going to get it done. You're going to figure it out. You know, not having the luxury of, well, let's have a meeting about it. No, just go do it. You know, having faith and demonstrating we had faith and demonstrating that trust that we knew we had.

22:12And like I said, they didn't disappoint, but they, I think, gained so much confidence and the whole organization gained confidence of what we can do and what we can do quickly.

22:27That was Mary Barra, the CEO of General Motors, in conversation with Amy Bernstein, the editor of HBR, at our HBR Live Leaders Who Make a Difference conference.

22:45This episode was produced by Mary Du. We get technical help from Rob Eckhart. Adam Buchholz is our audio product manager.