In Good Company with Nicolai Tangen - Mary Barra CEO of General Motors

Episode Date: April 5, 2022

In this episode Nicolai Tangen talks to Mary Barra the CEO of General Motors. They discuss the transformation of the auto industry, challenges with leading a large organisation through crisis and how they deal with a large investor like us.  The production team on this episode were PLAN-B’s Tor-Erik Humlen and Olav Haraldsen Roen. Background research were done by Sigurd Brekke and Bård Ove Molberg with additional input from our portfolio managers Arnab Seal and Trym Torvund.Links:Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi everybody, today I'm going to talk with Mari Barra, one of the most powerful women in the world. Mari is the CEO of General Motors, which makes iconic cars, but also increasingly a big player in electric vehicles. Welcome to the program, Mari. Well, it's great to be here. Thank you so much. One of the things that not many people know about you is that you're in a way a Finn. Absolutely. I'm 97% Finnish. So, very proud.

Tell us about the Finnish part of you. Well, you know, my parents both spoke Finnish. In fact, my grandparents only spoke Finnish. And so, my parents learned both languages. Unfortunately, I didn't have the language capability. So, I only know a few words in Finnish. But, you know, as a child, we celebrated our heritage with the Finnish community in the

greater Detroit area. So I learned a lot about the country. And unfortunately, I've never had the opportunity to visit, but I will. It's on my bucket list. Great. Now, I believe your dad worked for GM for 39 years and you have worked there since you were 18. Now, have you actually chosen the car industry or were you just born into it? That's a good question. Well, you know, I think because of my father who worked at General Motors for 39 years,

I learned a lot about the industry and he would bring home new cars occasionally to share with us and the whole neighborhood would come down. So I think I got excited about vehicles and then because I was going to pursue an engineering degree, it seemed natural to go into the car business. And there is something about it because the purchase is so significant for most people and at General Motors we get to be a part of that. Yeah. Was it controversial for a woman to start working with the body shops in GM at the time? You know, it was, I wouldn't say it was controversial, but it was uncommon. And so I think, you know, there were women before me that had laid a lot of the foundation, but I wasn't always assumed to be an engineer in the room. But I can tell you now, one of the

things I'm most proud of at General Motors in my 40 years of being here, our commitment to diversity and inclusion. And frankly, I'm in the CEO role today because people invested in me 20, 25 years ago. So I had the right experiences and opportunity to take on different assignments. So I'm very, very fortunate about how diversity is valued at GM. So when you reflect on your journey, you know, all the way from kind of the factory floor to becoming the CEO, what kind of reflections do you make? Well, you know, I always tell people, you know, one, you should do something that you love because then work is not as much work. But, you know, I think the key assignments for me were was when I was one a plant manager, because that really is where it all comes together when we were building, you know, 851 vehicles a day across two ships, and all the systems that had to come together to make that happen. I learned a lot in that role

to make sure we could build the vehicle safely with quality and do it efficiently. Also, you know, I had a two year assignment that I ran HR right as General Motors came out of restructuring. And I always knew that people were key to the success of any company. But, you know, having the opportunity to be in HR at a pivotal time as we were remaking the company was a significant assignment. And then, of course, running product development where you get involved in every single product and you're spending time in design, or you're spending time at our proving ground testing vehicles. That's a pretty good job. So I think those are three critical experiences in my career that, you know, help me in this role every day. Yeah. No, I think you've got a very, very

interesting background from HR. And that's really rare for CEOs. I see, for instance, in Norway, I believe out of the top 50 companies, only three people have CEOs with HR background. How is that impacting your leadership? You know, I think it's a really good experience to have, because as I said, at the end of the day, it's talent. And how do you hire, recruit, retain? How do you set up people policies that encourage people to do their best? And the other thing, being an engineer, when we're working on

something, we can evaluate the numbers and we make a decision. But HR is all about people. And sometimes people do unique things. And so, you know, putting policies together and programs together to support the company and to attract and retain the talent that we need, I think has been very important because it really it's what makes the company go every day. And I think you've said that you use crisis to drive change. Do you think the HR background has made you more able to cope with the various crises you've been through? Yeah, I definitely think it's been very helpful to have the HR background. Because I think with that experience, you learn to look at things from multiple vantage points, especially of what's the impact to people.

And you can look and make better decisions. I mean, when we have to make big strategic decisions or changes, I always try to look at all of the stakeholders, whether it's our employees, our dealers, our suppliers, our unions, the communities that we live and work. And having that human side of it to understand how it's going to impact people, I think, is positive in making change. Because no one necessarily loves to change, but having people embrace change and really understanding what's going to drive and help them understand why it's important, I think, is vitally important as you drive change. And when you look at how quickly every industry is transforming, clearly the auto industry is.

That's very helpful. every industry is transforming clearly the auto industry is that's very helpful moving on to the auto industry in general and of course with european eyes um we we rarely see uh you know uh traditional american cars on european roads so so what happened here? Well, I think for a long time, General Motors owned Opel. And so Opel was our European brand. And I think that, you know, because we had that, we didn't introduce a lot of the other brands like Chevrolet, you know, we have some Cadillacs in Europe. But I think that's when I look at it from a GM perspective, I think that's one of the reasons because for quite, you know, for decades, we had the Opel brand that, you know, had a lot of similarities with Buick.

As we look now, we see a huge opportunity with our electric vehicles and especially our premium vehicles in Cadillac. So we should have the conversation again in five to 10 years. Absolutely. Well, in the meantime, of course, we see Teslas around every corner here up in Oslo. And tell us about how you intend to take market share in this market. Oh, it's a great question.

And, you know, when you look at today, and there are some countries in Europe that have, you know, much higher EV volume of the total cars sold than many other countries. But when we look at it across many, many countries, the US, China, and many places in Europe, there is an opportunity because you need to have EVs across all segments.

All of our customer research says that when people want to look at an EV, it has to have the right range. It has to be beautifully styled. But importantly, it has to be the right range. It has to be beautifully styled. But importantly, it has to be the type of vehicle they want. If they're looking for a crossover, they're not going to buy a sedan. If they need a truck, they're not going to buy a utility vehicle. And so having a wide portfolio of vehicles so each customer can fit not only their lifestyle or their livelihood, but also

their price point, I think is very important. And that's what General Motors has done for many, many years. And so we can quickly, with our Altium platform, roll out a whole portfolio of vehicles and reach more customers in the segments that they're looking to purchase in. Yeah. Now, you were actually one of the first companies

to produce electric vehicles, but do you feel that you're a bit late to the party now? How do you look at this internally? Well, yes, I'm very proud. And we learned a lot because when we did EV1 over 20 years ago, we never really stopped working on electric vehicles. We continued to work on the battery technology. We then had the Volt, which was an extended range electric vehicle that was very successful, but still not full electric. And as we looked at this transformation, we said, instead of doing hybrids, we've got to move quickly to the end game. And that's why over three years ago, we started working on a dedicated EV platform that we now call Altium. And so I

think that puts us in a position not to have one or two entries, but to really get the portfolio that we just talked about. Do I wish we were two, three years early? Absolutely. But I also, over this period of time, especially in the US, that's where we have started to see a tipping point with electric vehicles. We're seeing that in China as well. And that's why, again, in Europe, I think that's an opportunity because EVs will be most prevalent in the most developed countries or those that are

driving it from a regulatory perspective. So right now, all I can tell you is we're moving as fast as we can to get that portfolio launched. Because every day we see more and more acceptance and interest in EVs. Now, in your recent investor letter, you only talk about electric vehicles. So what happened to hydrogen and some of these other promising technologies that you were working on? Sure, we're still working on hydrogen. We have a partnership with Honda. And we think hydrogen fuel cells are a very much part of the solution over the longer term, especially for larger vehicles, think class seven and eight trucks, or those vehicles that have a high duty level required. So we continue to work on fuel cells, they're more expensive than battery electric.

And so I think as we we've seen costs come down, we need to work to get the technology to have even lower costs. And then I definitely believe hydrogen fuel cells will be part of the solution from a zero emissions perspective. Yeah. Now talking of which, how do you plan to reach carbon neutrality in 2040? And how certain are you to achieve those goals? Yeah, no, I'm very certain. Because as we look across the business, we understand every area that we need to improve to get to that carbon neutrality. And there's teams working on it today. And so we have a plan that we're executing from a vehicle perspective, from a facilities perspective, from all aspects. So I'm very

confident we will be carbon neutral by 2040. And also we have a plan in place to be selling only electric light duty vehicles in the U.S. to start by 2035. And that's our full line, not just a brand that has one or two models, but all of the vehicles that we sell in the U.S. to start by 2035. And that's our full line, not just a brand that has one or two models, but all of the vehicles that we sell in the U.S. And I think that also we have a very detailed plan of what vehicles and when do we launch and when do their ICE counterparts, when do we stop building them? So we have detailed plans to back up all of the announcements that we've made. Moving on to ownership. So as you may know, the Norwegian So-and-Well Fund is the largest single shareholder in the world.

And having your insight now into the sector, how should we look at the auto sector as a place to invest money? Well, I think what is happening is kind of a once-in-a-generation type of transformation. When you look at changing over the vehicles, and it's not just the electric propulsion aspects of the vehicles, but it's also that the vehicle is a software platform. And so when you look at an industry that over the past from an investor perspective was a value segment, now we've got the value piece, but we also have this tremendous growth opportunity, not only for General Motors, you know, having additional volume because of being a first mover from an electric vehicle perspective across mainstream platforms, but then also autonomous vehicles and our autonomous vehicles through cruise will also all be electric. You know, how ride share evolves is going to be a

very important and a significant part of our growth. And then finally, all of the experiences and services subscriptions that you can offer the customer to improve their experience is another huge growth opportunity. And when you think about software, it's got a different margin profile as well. So that's why we're so excited. And we believe by 2030, we can almost double our revenue. Now, as a large shareholder, one of the things we do is to vote at your AGMs. And we publish our votes five days ahead of the AGM.

And now we have expectation documents for governance issues and so on. And we have actually voted against you as being appointed as the chairperson, since you are also the CEO. Now, do you think we are wrong in thinking this way? Or what are your views on it? Well, I think when you're in the middle of a transition, the General Motors board obviously makes this decision and they don't have a hard and fast. There's been times where there's been a separate chair and the CEO, we feel is best to drive a long-term shareholder value at this moment, this point in this transformation. So it's something the board regularly reviews. Again, we've had both structures. So I think right now, especially with the experience that I bring to this role, we think it's the right structure. So I'd ask you to reconsider. So it's a temporary thing.

Well, like I said, we will probably move through time and there'll be times where it's together, times where it's not, just based on the situation of the company and the person in role. So who's the most important person you brainstorm with? I mean, if you've got an issue or something you're wondering about, who do you consult with? The top 15 people in the company is our senior leadership team. And there's some issues where the 15 of us, you know, representing all the different functions and regions talk. But then we also, from a management perspective, have a small group of our president, our general counsel, our CFO. And there are issues that we look at and talk from a strategy perspective. But I would also say we leverage our board extensively. When we're looking at big strategic

issues, not only can I call any member of our board based on their background and experience and say, hey, here's what we're thinking. Can you give us your thoughts from your background? But there's also times where we formally take the board through the strategy development. So we don't just bring it in and say, here it is with a bow on it, please approve. We go in and we say, here's the direction we're looking at. Again, give us your best thoughts. And then we'll come back sometimes between board meetings, depending on the timing of the change that we're looking at. But I can tell you by engaging our board at the early stages of as we're making strategic shifts has really enhanced our plans because we've leveraged that experience. So we have a very hardworking board. You are also personally on some other

very interesting boards such as Disney and Stanford and so on. Tell us what's the most interesting board you're at? Well, you know, I find with the opportunity to serve on the Disney board, two iconic companies that we don't really compete with each other. But in many cases, there's parallels to our business. If you look at how we're making this big transformation to EVs and AVs and connectivity, they're making a big transition in that space to streaming and direct to consumers so there's so many parts of our business that are similar that i feel i can contribute a lot to the disney board but also i glean a lot that i can take back uh to to make our execution and our strategy stronger and i did just recently roll off of the stan Board of Trustees, and now I'm on the Duke Board of Trustees.

Education for me is one of my and my husband's key focus areas because we believe education unlocks the future for everyone. And so also, I would say on both boards, hearing the different perspectives and what's happening in higher education and the advanced research that's going on at these institutions also is very beneficial for my number one role of being the CEO of General Motors. Absolutely. So if you had to take another degree now, what would you do? Oh, wow.

Very interesting. I probably would, you know, I'm an electrical engineer, so I have in my life coded. So I understand that. But I probably would focus on data analytics because I think when you look at all the information that we now have available, how to leverage that information and turn it into something that you can make better decisions, I think is important. I also would probably want to advance my electrical engineering degree and software from artificial intelligence machine learning. That's actually another key area of focus because it really is changing every industry. I agree entirely. That sounds like a really good plan. Earlier in the year, you visited the MBM offices in New York, and I happened to be there

and had the great pleasure of meeting you. So thank you so much for coming by. Now, why do you prioritize those type of meetings? Well, I think it's very important. I always find meetings with our top investors and investors that are interested in the company, I find them very beneficial because I understand, you know,

we serve, we have a fiduciary responsibility to our owners. And so understanding what their perspective is, you know, we serve, we have a fiduciary responsibility to our owners. And so understanding what their perspective is, what's on their mind, making sure they understand the business and understand our strategy. I always come away from those meetings, having learned another perspective that helps me as I lead this company. So it's very important. Now, moving on to the GM culture. How do you define the GM culture? I'm sure you have different type of cultures in different part of the organization, but the overarching GM culture, what is it?

Well, I think from a culture perspective, we have a set of values and behaviors. And I really believe that how you act every day and what you do is so much more important than a slogan on a wall. And so we really try to live it every day. In fact, our compensation system, our recognition system is all tied to our behaviors. Because if people are focused on the customer and, you know, working as a team and looking over the horizon for opportunities and being bold, speaking up when you have a different point of view, also, you know, winning with integrity, those are a couple of our behaviors that's going to create the culture that we want. I would also say we very much focused on

inclusion and equity. And we actually, you know, added a behavior called be inclusive, which is to respect other people's, you know, different points of view and be open to listening and learning. And overall, what we want to have at General Motors is a culture where everybody can be themselves and be their best selves at work. And, you know, our foundational belief is if you can be yourself and be your best self, you're going to do your best work and that's going to advance the company. So that's what we work on every day. And then our values are focused on the customer, on excellence, on relationships, and then on seeking truth to make sure, and we live that. And, you know,

the senior leadership, we talk about it and we say to, you know, all employees, please hold us accountable. And there's times where we get, you know, I'll get an email from an employee saying, hey, you know, I don't understand how this fits in with our values or with our behaviors. And we end up, I end up often having a, you know, just a one-on-one conversation to make sure they understand why we did what we did. So that's the culture we're striving for. We're making progress, but we have work to do. I love the seeking truth element of it. Not many companies would have that as a separate value. Now, what do you put in that and how can we see it? Sure. Well, I would say first, it's a value that we adopted from our startup. So Cruise is where we majority own it, but it's an independent company. And as we started to work there and really wanted to infuse that startup entrepreneurial culture into a company the size of General Motors, we really had a lot of discussion. And for us, Seek Truth is so often, especially in a large

organization, people have different perspectives on an issue based on their responsibility. Seek truth was really us asking everybody, don't just look at it from your point of view. Look at it holistically from an enterprise perspective, and let's get the right information on the table to make the right decision. That's what we mean when we say seek truth. It's, you know, if it maybe is something that doesn't, isn't exactly what aligns in your specific area, but it's going to be better for the enterprise, we've got to look that past department goals and regional goals to get to the best, to get to the truth, to make the best decision for the enterprise overall.

Yeah, I love it. I may, if you don't mind, I may have to steal that, to make the best decision for the enterprise overall. Yeah, I love it. If you don't mind, I may have to steal that as one of the values. So I fully agree with you on the behavioral being important. And we are looking at these defining moments in everyday life, which really, they are so important for leadership and it shows when you show proper leadership and so on. What are your defining moments as a CEO? Well, you know, clearly when the company went through a bankruptcy

and then when the company went through the ignition switch recall, those were defining moments for me personally, but also for our company. And I'll reflect on the ignition switch recall because it was a tragic situation, you know, over a 10 year period where people, you know, didn't seek truth to find out why there were these, you know, handful, but very serious issues that we then, you know, and one of the things that most people don't recognize is we actually figured it out. Now, it took us too long. And we changed a lot. But I think one of the things we learned from that, the defining moment was,

we're going to do the right thing, even if it's hard. And I think so often people, business leaders, think they have a choice to make when there is only one choice, it's to do the right thing. And we really leveraged that. And I've talked since 2014 to the entire company many times about,

we're going to do the right thing even when it's hard. It's easy to do the right thing and live your values when everything's going well, but the defining moment is when things aren't going so well and what do you choose to do? And that is really, our employees have really embraced this. And I think it makes us stronger as a company as we execute every part of the business.

What we often see from large companies such as your own is bureaucracy building up and things are becoming slower over time and so on. What do you do to keep the pace up and what do you do to keep bureaucracy down? Well, I think any large organization, you need process. At General Motors, at any point in time, we have 100 vehicle programs in flight from early concept to almost launching to building them. And so you need strong processes, but you just have to be relentless and making sure that, you know, there isn't added steps in bureaucracy. And because we're, you know, pretty much a functional organization, one of the things I've asked everybody to do when I talk about with every employee group that I have the opportunity to do Q&As or talk to is find a way to say yes.

When someone asks you to do something, even if it's not exactly to process or it's not your direct responsibility, if we can all find a way to say yes to the person who's asking for our help or asking to help us accelerate something or make something better that's when we're going to be stronger and we have to remember that processes are how we keep the business organized but they we don't serve processes the processes serve the enterprise in doing what's right for the customer and having you know outstanding products and services for our customers. Now, I've read somewhere that you have a consensus approach to leadership. It's not something we associate with the American style of running companies, more like a Scandinavian style of management.

Tell us about it and why is it important for you? Well, if you think at general motors uh we you know we primarily do everything related to how people move and and then the services around it and so i always find if we can get especially the senior team with all their different experiences you know i've been in a lot of places of business but i i haven't you know worked outside of the u.s i haven't been in the sales and marketing function. So I find that if we can look at a problem with everybody's different perspective, diverse views sitting at the table, we're going to make the best decision.

Now, there are times where I've got to make the call and I'm happy to do that. But I always think we make better decisions even if we don't to complete agreement, by hearing everybody's perspective and point of view. And the fact that people feel heard, I think then when they understand if we went in a different direction, at least they knew what they were thinking was considered and probably maybe altered the decision 10 or 15 degrees to make it stronger. to make it stronger. Now, we have thousands of students listening to this podcast. What kind of advice would you give to the young these days? Well, I think first is, you know,

find what you really are interested about and passionate about from an industry perspective. And that's not to say that there is, you know, every job has parts of it that you love to do and parts that you need to do. So you've got to, you know, be realistic, but find something you really are interested in, love doing, and then work really hard. You know, hard work will distinguish you from your peers. And if people know you're owning your job,

you know, we talk about it, especially being in the vehicle interest, you know, know you're owning your job. We talk about it, especially being in the vehicle interest, who washes a rental car? No one. But if you approach your current assignment like you're going to do it for the rest of your life and you improve the processes, you remove bureaucracy, you build a network, people see how hard you're working to do the work you're responsible for today better. And I think that's what distinguishes you when you'll get more and more opportunities. And then the last thing I would say, and this is primarily directed at women, but it's a generalization, but have a point of view, speak up. When you're in forums and people are brainstorming topics and you have either a different perspective

or you have a new idea, find your voice, have your voice. Even if, you know, I think so many times people, especially as they enter a new business are worried, well, you know, maybe I'm going to sound stupid. Don't worry about it. Have a point of view. And, you know, I think often you'll find many people were thinking about the same thing you were.

Yeah, I think that's great advice. Absolutely. So when you sit in a car, what is it that you look at? What is it that you feel? And what is it that you, what kind of experience is it that you want to have? Well, I think, you know, first I look at, you know, how the interior is designed. Is it beautiful? But then all the controls, because there's so much you can do in a vehicle today. Is it intuitive? I don't want to get out the owner's manual. I want to just be able to get into the car, jump in and intuitively know how everything works or, you know, make it pretty

easy to connect to, you know, whether it's connecting your phone or, you know, using the different functionality on the vehicle like Super Cruise. And then, you know, I want it to be of high quality. And, you know, what I've also experienced now with electric vehicles and off of our Altium platform, because the platform makes the structure of the vehicle so solid, it's a different driving experience, which it's hard to explain. But the vehicle is so sound, so firm in its ride that just gives you great confidence in the way the vehicle functions. So, you know, it's a whole, it's the way the, you know, not only the way it's styled interior and exterior, but it's also how well the controls are integrated, but then the driving

experience itself. Great. Now, of course, we have to ask you at the end here, what kind of car do you drive? Oh, well, one of the benefits of being at General Motors, I would say when I was in product development, I got to drive everything. And so I feel like every vehicle has a special place in the portfolio. But right now I'm driving a Hummer EV, which is a super truck. It's a big vehicle, but with four--wheel steering it is just so maneuverable and you know driving an electric vehicle and the benefits of our ultium platform it's quiet it's instant torque it's a lot of fun so that's the vehicle that i'm currently spending the most time in well thank you so much for that it's been fantastic having you on the program

good luck with everything and we look forward to staying in touch well thank you very much it's really been an honor to be a part of your program.