Incoming General Motors CEO Dan Akerson may have been relatively unknown in auto industry circles before Thursday, but he is now set to lead one of the world’s largest auto makers as it prepares to go public.
Aside from being a member of GM’s board since July 2009, Akerson has little experience in the auto industry, leading some Detroit insiders to question whether or not he is the right man for the job.
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“Why have another guy who is not even an industrialist run the country’s biggest industrial company?” said Dale Buss, a contributing editor at Edmunds.com who has followed the auto industry since 1981. “Everything is aligned for this guy to have a bit of an ease-in period, but I’m just not sure if it’s the best choice. I wonder if it’s time to dip back into the pool of management talent that definitely exists in the auto industry.”
Akerson, a managing director at private-equity giant Carlyle Group, is taking the torch from Ed Whitacre, who despite his lack of auto experience has been credited with steering GM out of bankruptcy and back to profitability. GM on Thursday posted its biggest quarterly profit since 2004. And like Akerson, Whitacre made a name for himself in the telecommunications sector by leading AT&T (NYSE:T)
David Cole, chairman of the Center for Automotive Research, said he isn’t concerned about Akerson’s lack of auto experience, especially given GM's bench of Detroit-savvy executives.
“A leader knows what they don’t know and has people around them that do know. That is key. That is the model we’re seeing at General Motors,” said Cole. “What is necessary in a leader today is someone who acts and thinks like a coach. From what I understand, he’s very good at that.”
While he has little auto experience aside from his brief tenure at GM, Akerson does know something about turning around struggling companies. During his four-year tenure as CEO at Herndon, Va.-based XO Communications, he helped lead the communications service provider’s successful restructuring.
Some were surprised that GM wouldn’t look to someone who at least had some experience in the manufacturing world as the U.S. did when it awarded rival Chrysler to Italian auto maker Fiat and its leader, Sergio Marchionne.
“I just think the skill sets are not necessarily the skill sets that I would have expected for Mr. Whitacre’s successor. I would have expected someone that at least had much greater depth in either automotive or manufacturing experience,” said Sheldon Stone, a turnaround expert at Amherst Partners. “But maybe they feel the right people are in the right spot and you don’t have to be an ‘auto guy’ or ‘auto gal’ to be successful.”
There are others in Detroit that GM could have turned to, including Mark Fields, a rising star at Ford (NYSE:F) and that company’s Americas president, and Mark Hogan, a former GM and Magna International exec (NYSE:MGA).
GM also could have looked inside its own offices at several Detroit veterans, including Mark Reuss, its North American president, or Joel Ewanick, its vice president of U.S. marketing who came over from Hyundai and now leads GM’s rebranding mission. Others expected GM to tap former Microsoft (NYSE:MSFT) exec Christopher Liddell, who currently serves as the auto maker's chief financial officer. GM also could have looked to Stephen Girsky, its vice chairman of corporate strategy and business development, who has 25 years of auto experience.
“I guess they are thinking they still need to have a marked departure from the GM of old,” said Buss, alluding to the decision to tap outsiders Whitacre and Akerson.
Akerson is best known for his five-year tenure as CEO and chairman at Nextel Communications, which was eventually acquired by Sprint (NYSE:S). He also served as the chairman and CEO of General Instrument Corporation and during the 1980s worked in a variety of positions at MCI Communications.
His background suggests a strong knowledge of international markets, which will be key as GM attempts to tap into emerging economies in China and elsewhere and it looks to turnaround its struggling European operations.
It’s not at all without precedent for an auto maker to tap someone without Detroit experience. Ford famously brought in outsider Alan Mulally as its new CEO and under his leadership the company avoided bankruptcy and has emerged as the preeminent American auto brand.
“Mulally has done an outstanding job at Ford and he didn’t really know the auto industry. He brought in leadership qualities that were excellent. Instead of being a king he’s been a coach,” said Cole.
Then again, Mulally did have experience in manufacturing as he served as an executive vice president at aerospace giant Boeing (NYSE:BA) and CEO of Boeing Commercial Airplanes.
In addition to his evolving role at GM, Akerson is managing director and head of global buyouts at Carlyle. In 2007, Carlyle acquired Allison Transmission from GM for $5.6 billion. It’s possible Akerson will be able to put his investment-banking experience to work as GM eyes strategic acquisitions and readies its initial public offering, which is expected later this year and will consumer a great deal of the new CEO’s time.
It’s not clear if Akerson will be forced to give up any of his other positions as he currently sits on the boards of directors at American Express (NYSE:AXP), Booz Allen Hamilton and Freescale Semiconductor.