Why Mary Barra Is GM's New CEO

GM said on Tuesday that its well-regarded global product chief, Mary Barra, will be the auto giant's next CEO. Barra will succeed Dan Akerson, who is retiring in January. Photo credit: General Motors Co.

Well, that's certainly one way to change the subject: A day after the U.S. government said that it had sold the last of its General Motors stock, GM announced that it was getting a new CEO.

Mary Barra, currently GM's global product chief, will succeed current CEO Dan Akerson on Jan. 15th, the company announced on Tuesday.

Akerson, who steered GM through its post-bankruptcy reconstruction and into an era of good profits and strong products, will retire. Originally expected to retire in another year, he accelerated his plans after his wife was diagnosed with cancer, GM said in a statement.

Barra, who is 51, will be the first woman to lead a global automaker. But she's not exactly a surprise choice: The 33-year GM veteran has shined in her current role, where she has played a huge part in GM's ongoing transformation.

After years of finance types, an engineer to lead GM
When Akerson appointed Barra to replace retiring Detroit icon Bob Lutz as GM's product chief early in 2011, it was hard to see what he had in mind. I said at the time that Barra was a capable executive who had a reputation as a bridge builder, but she seemed an odd choice to replace the charismatic Lutz, a "car guy's" car guy.

It didn't take too long for us to figure out what Akerson was thinking. Barra, an engineer whose GM career started with an internship in 1980, launched a sweeping global overhaul of GM's product development process, and of its global product plan.

That overhaul has turned out to be huge: GM immediately realized substantial cost savings, has seen its product quality and customer satisfaction ratings go way up, and is on course to gain further savings and quality improvements in coming years.

Of course, it wasn't hard for Akerson and Barra to see what needed to be done -- Ford's global transformation gave them a great model. But making it work, getting GM's far-flung, quarrelsome fiefdoms to buy into the approach and make it happen, was another thing entirely. Many would have said that it was an impossible challenge.

Barra's overhauled product-development process has already generated several highly praised new products, including the 2014 Cadillac CTS. Photo credit: General Motors Co.

But Barra made it happen, and recent GM products like the Chevrolet Impala and Cadillac CTS show how well it's working.

Now, she gets to run the whole show as GM's chief executive officer -- but not as president or chairman, two roles held by Akerson that will now be filled by others.

Other GM stars get new jobs
Akerson's seat as chairman of GM's board will be filled by board member Tim Solso. Solso, 66, was the chairman and CEO of Cummins until his retirement in 2011.

GM's board had several strong internal candidates for the company's next CEO. Vice chairman Steve Girsky, CFO Dan Ammann, and North America chief Mark Reuss had all been discussed as potential replacements for Akerson. All three would have been plausible choices.

As it turns out, all three are on the move as well. Ammann, the former Morgan Stanley banker who has shined as GM's chief financial officer, will become GM's president. He will continue the project of integrating and streamlining GM's far-flung global operations.

Reuss will step into Barra's role as GM's new global product chief. It's the perfect role for Reuss, a dyed-in-the-wool car enthusiast whose father was once GM's president. Reuss will also lead GM's global purchasing and supply chain organizations, a role Barra took on earlier this year. Alan Batey, currently the global head of the Chevrolet brand, will succeed Reuss as GM's North America boss.

Meanwhile, Girsky is departing. He will move into a senior advisory role effective immediately, GM said, and will leave the company in April.

The upshot: a new era for GM
As a Detroit outsider who seemed slow to pick up the nuances of the auto business. Akerson was viewed dimly by many observers during his early days as GM's chief. But over time, his strengths became apparent, as he slowly but surely started to harness GM's massive potential.

Akerson will be remembered for several significant achievements, starting with this big one: He identified and developed a superb team of understudies.

Now, the best of that team has been given the reins, and together they have a chance to give stable leadership to GM after years of turmoil.

It'll take time before we know whether today's moves were the right ones, before we know whether Barra can unleash the potential of a post-"Government Motors" GM. But from here, these look like the right moves. I'd say that GM shareholders should be cautiously pleased by Tuesday's announcement.

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The article Why Mary Barra Is GM's New CEO originally appeared on Fool.com.

Fool contributor John Rosevear owns shares of Ford and General Motors. You can connect with him on Twitter at @jrosevear. The Motley Fool recommends Cummins, Ford, and General Motors. The Motley Fool owns shares of Cummins and Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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