The success of the hot Tesla Model S has GM’s CEO worried. Photo credit: Tesla Motors Inc (NASDAQ:TSLA).
Unless you follow the automakers closely, you might have missed one of the biggest news items of the week. General Motors Company (NYSE:GM) Vice Chairman Steve Girsky dropped this quiet bombshell in an interview with Bloomberg this past week: GM’s brass is worried about Tesla Motors Inc (NASDAQ:TSLA).
Old GM wouldn’t have cared about Tesla
The fact that a massive global automaker is worried about still-tiny Tesla Motors Inc (NASDAQ:TSLA) is a tip of the cap to the Silicon Valley upstart and its CEO, Elon Musk. While it remains to be seen whether Tesla will succeed in the long term, it has already earned considerable respect.
Just by bringing a high-quality mass-produced car to market, Tesla Motors Inc (NASDAQ:TSLA) has gone where almost no automotive start-ups have managed to go before — never mind that Tesla’s cars are the best-yet implementation of a groundbreaking new technology.
But Girsky made this little disclosure as part of making a larger point about General Motors Company (NYSE:GM). For decades, GM was famously arrogant, and old-school General Motors Company (NYSE:GM) executives wouldn’t even have taken notice of an upstart like Tesla.
Even now, it’s not hard to find plenty of old Detroit types eager to argue that Tesla isn’t worth taking seriously – that they’re just a company full of computer geeks playing around with laptop batteries, pretending to be an automaker.
That’s how it would have gone at Old General Motors Company (NYSE:GM). Tesla? Who cares!
But what Girsky is saying is that Old GM is being replaced by a New GM — or, at least, he and Akerson hope that’s what’s happening.
A major shift in a dysfunctional corporate culture
Girsky’s point was that Akerson is pushing hard to change GM’s culture, to get rid of that old insulation and arrogance and replace it with something much more competitive.
Clearly, GM needs to be hungrier, more attuned to the reality of its hypercompetitive global business. Here’s another example from Girsky: For years, GM had a fantastic research department that won dozens of new patents every year — but few of its innovations found their way into vehicles.
Akerson and Girsky want to change that. There’s much more focus now on real-world innovation, on customers’ needs, on technology that can be commercialized quickly, they say.
GM is finally able to build cars that can compete with the world’s best, like this Cadillac ATS. But to succeed, it has to do it consistently. Photo credit: GM
And all of this comes in the context of a global reorganization and new controls that have reduced costs, reduced the time it takes to get new products to market, and given senior executives much more data – much more quickly.
GM doesn’t have a choice: It has to change, and fast — GM managed to hold its global lead for decades even as it blundered along, but it can’t do that anymore. Its two largest global competitors, Toyota Motor Corporation (ADR) (NYSE:TM) and Volkswagen, are well-run cutting edge contenders. Both would have eaten Old GM’s lunch. (Arguably, Toyota Motor Corporation (ADR) (NYSE:TM) did.)
To compete, General Motors Company (NYSE:GM) has to follow in old rival Ford Motor Company (NYSE:F)‘s footsteps and reinvent itself as a focused, disciplined, globally oriented company.
That’s what Akerson and Girsky are trying very hard to do. Making a point of learning the lessons of Tesla’s success is just one sign of that effort. But will it work? We’ll find out.
The article GM: We’re Worried About Tesla Motors originally appeared on Fool.com and is written by John Rosevear.
Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear . The Motley Fool recommends Ford, General Motors, and Tesla Motors and owns shares of Ford and Tesla Motors.
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