Treasury has appointed Edward Whitacre to be the new chief of GM as it emerges out of restructuring. Edward definitely has a commendable background and turning AT&T to the world's largest telecommunication company is to his creddit. I have no doubts on his leadership and management skills in stressful conditions as he was part of the restructuring group of Lazard in the early years of his career. What I have been contemplating is doesnt knowledge of an industry play a role at all in being able to be successful in it? I ask the following questions to myself:
1.Doesn't capital structure, cash flows and financials change with different industries and isnt mastering of these for years which comes with experience important to be able to reingeer a company and rise it from ashes?
2. Doesn't the Chairman need to comprehend competitve dynamics of an industry to be able to come up with a market attack plan?
3. Can a Chairman be agnostic to industry dynamics and trends, only exposure being that of riding a automobile, and succeed in it?
4. Don't companies expanding in businesses and brands other than their core expertise fail to add shareholder value over time? (Examples of failed endeavors by companies into non core activities abound in my mind)
I understand that GM has no where to go but up from where it is right now. Though can someone please point to evidence that makes this appointment rational. Is all that is needed to turn around GM is an iron fist attitude and strong headedness? I wish the new Chief luck in his new job and to me nothing but luck can help him get out of it.
Nice post Anubha! We can just wait and watch now can't we?
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