AAH #788 - Changing The Culture At Legacy Automakers... or is it just impossible?
Autoline After Hours
Autoline After HoursApr 24, 2026
AAH #788 - Changing The Culture At Legacy Automakers... or is it just impossible?
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Concept
culture at a legacy company
When people say “culture” at a big old company, they mean how the team tends to think and act day to day. At car companies, that can change how they build cars, solve problems, and make decisions.
She’s saying culture is basically the social and working environment inside a company—how people communicate and what they all agree matters. That can affect how well a company runs and makes decisions.
They’re talking about whether big car companies can really change how they work internally. The main point is that culture is deeper than office perks.
They’re saying “culture” is basically how the company really works. It affects how people make decisions and behave every day, even more than office perks.
A playbook is like a rulebook for how the team should act and make decisions. The idea is that culture can be turned into clear, repeatable ways of working.
A silo is when different teams work separately instead of collaborating closely. It can make each group good at its own job, but it can also make it harder to solve bigger problems that involve multiple teams.
Scalable efficiency means a system gets better at making more things without getting dramatically more expensive or complicated. It’s the goal of mass production.
Henry Ford is mentioned as the person associated with the early assembly line. The discussion uses him to explain where the traditional “make cars in huge numbers” approach came from.
An assembly line is like a production “conveyor belt.” Each worker or machine does one job over and over, so the whole process becomes faster and cheaper when you’re making lots of cars.
Rivian is brought up as an example of a newer automaker that’s run more like a startup. That usually means faster decisions and quicker changes as they learn.
Lucid is mentioned as a newer EV company that’s run with a tech-startup culture. The takeaway is that the way teams are organized can change how quickly they respond and improve.
BYD is used here as an example of a major Chinese automaker. The point is that some of these companies are organized like fast-moving tech firms, which can help them move quickly.
Tesla is used here as an example of a newer-style automaker that runs more like a tech startup. The idea is that decisions happen faster and teams adapt in real time.
Concept
relay race vs basketball team
They’re comparing two ways of running a company. A relay race is step-by-step handoffs between teams, while a basketball team is everyone acting together in real time to adjust as the game changes.
They’re contrasting startup culture (where one person can be seen as the hero) with car companies (where success depends on lots of people working together).
Concept
Detroit space
They’re talking about the traditional car-industry world around Detroit. The idea is that a lot of innovation comes from teamwork and systems, not just one famous person.
Concept
outsourcing that to robots
The hosts suggest that even the “thinking” portion of manufacturing/vehicle creation is being delegated to automated systems and robotics. In automotive, this points to automation of physical tasks and also increasing use of software, planning tools, and AI-like systems to manage complex workflows.
“Legacy automotive” means the older, established car companies and how they work internally. The conversation is about why their decision-making can be slow and how they might need to change how they run the business.
“The Big three” is a nickname for the biggest traditional American car companies. Here it’s used to say they know what improvements are needed, but their internal way of operating makes change hard.
Toyota’s “system” is a way of running a company and factories that tries to make work more efficient. Instead of rigid job roles, people coordinate across teams so the process keeps moving.
“Detroit system” here means the older style of running automaking companies that people associate with Detroit. The point being made is that it’s usually more rigid and slower than Toyota’s way of organizing teams.
Cross-functional teams are teams where people from different areas work together. Instead of only doing one job, they coordinate so the work can still get done if someone is missing.
In metal stamping, a “die” is the tool that shapes the metal. A die change challenge is basically a contest to see how fast you can swap those tools without messing up quality.
Toyota has a specific way of running factories called the Toyota production system. The idea is to keep improving and remove wasted time and materials, so the factory can build cars more efficiently and with fewer problems.
“Quick die changes” is the practice of reducing changeover time between stamping runs. The speaker connects faster changeovers to leaner production—shorter runs, less inventory, and less money tied up in parts—while also improving quality through tighter process control.
A value stream is the whole path a product takes from start to finish. Instead of each department only trying to do its own job well, you organize everything so the product moves smoothly to the customer.
Here, “purchasing” means the company’s buying and supplier decisions. The speaker is saying that how you measure purchasing can affect whether the whole system runs smoothly or runs into quality and inventory problems.
“Optimize to price” means the main goal is getting the lowest cost. The risk is that chasing the cheapest option can cause bigger problems later, like parts quality issues or too much inventory.
“Clean sheet of paper” means you don’t just patch the old system—you start over with a fresh plan. It’s a way to redesign how work should flow instead of accepting the current problems.
Concurrent engineering means different teams work on the project at the same time instead of one after another. That helps catch manufacturing and supplier issues early, before they become expensive.
DFM and DFA are ways of designing parts so they’re easier to build and put together. Instead of designing only for performance, you design for how the factory will actually make the car.
A “skunk works” team is a small group that tries to move fast without all the usual corporate red tape. The goal is to test a new way of working before bringing it back to the main company.
A torque converter is part of an automatic transmission that uses fluid to move power from the engine to the rest of the drivetrain. If you redesign it, the car can feel smoother and respond better when you accelerate.
Stamping plants are where sheet metal gets pressed into the shapes used for car parts. If they can change dies faster, the factory wastes less time and can build more parts.
The Ford Maverick is a small pickup truck from Ford. The hosts are using it as an example of how Ford organized a team across departments to move the project along quickly.
“Industrialized” here means making a one-off success into a normal, repeatable way of working. It’s the step where you turn a quick experiment into something the whole company can use.
“Skunk Works” is a nickname for a special team that tries to move fast and build something new without a lot of red tape. The point here is that even if it works in a small group, it still has to fit into the normal company process.
A “culture of fear” means people are scared to speak up or make decisions. Instead of fixing problems quickly, they may wait for permission or avoid taking risks to protect their jobs.
Approval levels are the number of managers or steps you have to go through before you can make a decision. If there are too many, even small changes take forever.
Decision loops are the repeated steps of asking, waiting, and re-asking until everyone signs off. When they get too complicated, progress slows down a lot.
Compliance mentality means the company is mainly focused on following rules and proving things were done “correctly.” That can crowd out faster problem-solving and good judgment.
They’re talking about simplifying the approval process by cutting the number of steps in half. The goal is to make decisions faster so teams can move without waiting so long.
Car
Ford Topaz
The Ford Topaz is another Ford sedan from the 1980s. In the episode, it’s mentioned because the same kind of fuel-filler setup caused a safety issue that needed a grounding fix.
The Ford Tempo is a Ford car from the 1980s. The hosts mention it because a specific factory setup—how fuel was added—ended up causing a dangerous problem when the process changed.
The fuel filler neck is the part of the car where you insert the gas nozzle. The hosts say a material/design change made it build up static, which then caused sparks near the fuel.
The Ford Escape is a Ford SUV. The point of mentioning it is that when the factory switched to building a new vehicle, an old safety lesson was missed—so the same kind of dangerous issue happened again.
Static electricity is an electrical charge that can build up on surfaces. If it discharges at the wrong moment—like near fuel—it can create a spark that can ignite vapors.
Grounding is a safety step that gives electricity a safe route to go away. Here, they added a strap so the nozzle can’t build up charge and accidentally spark.
An operating manual is basically the “how we do it safely” playbook for a factory. The hosts are saying that important safety fixes shouldn’t disappear just because the plant starts building something new.
Toyota’s chief engineer approach is about making sure the next leader inherits the full history of how problems were solved. The hosts use it to argue that keeping that knowledge prevents the same mistakes from happening again.
This is a management idea from quality guru W. Edwards Deming. It means companies shouldn’t create an environment where people are afraid to report problems, because that stops fixes from happening.
The point here is that it’s not enough to just believe in a better way of working—you have to see it work in real outcomes. In car manufacturing, that means fewer problems and better launches.
“Recalls” are formal actions automakers take to fix safety or compliance problems found after vehicles are sold. The segment contrasts a slower development process with fewer recalls, implying better upfront validation and quality control.
Quality control is how a company checks that cars are built correctly and safely. It includes testing and inspections so defects don’t slip through.
Concept
Chinese automotives (newer entrants)
They’re saying newer Chinese brands don’t yet have decades of real-world history in the market. So it’s harder to know long-term safety and reliability compared with older brands that have been around longer.
It’s a saying that means taking small steps and being consistent will eventually work. The point here is that the hosts think “slow and steady” isn’t enough anymore, so companies need to move faster.
They’re saying the same kind of change is happening in the military too. The point is that this isn’t only an auto-industry issue—other big organizations are also trying to move faster.
SpaceX is a space company mentioned as an example of moving quickly and improving faster than traditional approaches. The hosts are using it to make a point about changing how organizations work.
NASA is mentioned as an example of an organization that decided to speed up. The hosts are using it to compare how different industries need to modernize their approach.
Companies say some suppliers are “strategic partners,” meaning they want them involved early and closely. The point here is that the behavior doesn’t match the label—suppliers are still brought in late and mainly for price.
They’re saying the process is often driven mainly by picking the cheapest supplier. The argument is that this can hurt the final product because it doesn’t reward better engineering or teamwork.
They’re describing negotiations like a fight—two sides trying to win against each other. The point is that this style makes it harder to work together on better solutions.
Electrification means cars are moving away from gas engines and toward electric motors. It changes how the car is built and also how it’s powered and supported with charging.
Digitalization means using software and data more heavily—both in the cars and in how companies build them. It can include updates over the internet and better use of information during production.
Supply chain reinvention is the redesign of how parts and materials are sourced, produced, and delivered—often driven by new technologies and regulations. In automotive, electrification and battery materials can force changes in supplier networks, logistics, and inventory planning.
Reman Day (Global Remanufacturing Day) highlights remanufacturing—restoring used products (often automotive components) to like-new condition rather than discarding them. It’s a sustainability and cost strategy that can reduce waste and conserve materials.
GM (General Motors) is one of the “Detroit three” automakers, and the episode discusses its financial performance and executive pay structure. The hosts reference GM’s statements about tariff impacts and how much executives were still compensated.
Companies file paperwork that explains how they pay top executives. It also shows what targets were used to decide bonuses, so you can compare “promised goals” vs “what actually happened.”
Tariffs are taxes imposed on imported goods, which can raise costs for automakers and their supply chains. The hosts discuss how GM framed tariff impacts as “beyond their control,” while also debating whether the company’s loss estimates were conservative or overstated.
This is the computer software that helps a car “drive itself,” like understanding what’s around it and deciding what to do next. It’s expensive and takes a lot of testing before it’s safe.
Performance metrics are the specific targets used to determine executive bonuses. In this segment, the hosts say a portion of compensation is tied to things like autonomous vehicle development software and EV-related progress, which can differ from traditional profit metrics.
Electric vehicles (EVs) are cars powered primarily by electric motors using battery packs instead of gasoline engines. The hosts discuss how EV strategy and expectations affected company finances and executive compensation.
A write-off is an accounting action where a company admits that certain assets or investments won’t deliver expected value. In this case, the hosts say automakers wrote off billions related to EV equipment that wasn’t used as planned.
Supplier contracts are agreements to deliver parts or equipment, often with volume commitments. The segment suggests automakers told suppliers to ramp up for EV growth, then demand didn’t match expectations, leading to contract issues and financial losses.
“Sandbagging” is a claim that a company intentionally downplays expectations to make results look better later. Here, the hosts debate whether GM’s loss estimates around tariffs were conservative or exaggerated to influence how executive performance is judged.
“Changing the goalposts” means the targets used to measure performance are adjusted over time. The segment says the proxy outlined EV-sales-based compensation, and that in 2025 the metrics were modified to account for how much the company didn’t lose and the tariff impact.
Concept
EV ride offs
They’re talking about money a company loses or has to write off because an EV project didn’t go as planned. It’s basically the financial fallout from EV plans that didn’t deliver.
Car
Bright Drop Van
The Bright Drop Van is an electric delivery truck/van. The hosts are using it as an example of an EV plan that didn’t work out the way people hoped.
An “EV lineup” is a company’s planned set of electric vehicles (models) and how they’re rolled out over time. This segment argues that legacy automakers made EV decisions years earlier, and the slow pace of industry change makes it hard to judge those decisions fairly in the short term.
Concept
infrastructure needed to support them
EV infrastructure means the charging setup and systems that help electric cars work in real life. The point here is that companies spent money on both cars and the charging support.
They’re talking about a self-driving-related project that didn’t work out. When these programs fail, it’s usually because the technology, safety requirements, or rules take longer and cost more than planned.
Cruise is a company that worked on self-driving cars. The episode is using it as an example of how these projects can hit big problems and not go as planned.
Concept
internal combined engines
They’re talking about rules that push cars away from gas engines and toward electric power. When governments set these targets, car companies have to plan around them, even if the market doesn’t move as fast as expected.
California has historically set stringent vehicle emissions and zero-emission requirements that can force automakers to sell a certain percentage of lower-emission vehicles. Because California is a large market, these mandates can strongly influence national strategy and investment decisions.
Concept
EV proponent
They’re saying they like electric cars, but they still think the plans and timelines were unrealistic. The argument is that good intentions don’t fix bad forecasting or execution.
Concept
pickup that was going to be forty thousand dollars, it came out closer to sixty thousand dollars
They’re talking about a truck that was expected to cost about $40k, but ended up closer to $60k. When the price jumps that much, fewer people buy it and the company’s financial plans can fall apart.
They’re talking about a “startup” way to build things: begin with something smaller, aim for a big long-term goal, and keep moving quickly. The point here is that the automakers didn’t follow that approach.
Concept
Silicon Valley narrative vs Detroit automakers
They’re comparing two different ways of doing business: Silicon Valley’s quick, software-focused style versus Detroit automakers’ slower, traditional style. The claim is that culture affected how well each side handled EV and software changes.
A software-defined vehicle is a car where the important behavior is controlled by software. That means the car can get updates and new features, instead of everything being “locked in” at the factory.
This is about how the car’s computers are organized. Instead of lots of separate controllers, the car uses a more centralized setup and groups functions by areas, which helps software work better and faster.
A Chief Data and Analytics Officer is an executive role focused on using data to guide product decisions, improve operations, and measure performance. The transcript uses this to illustrate how major automakers have been hiring tech leadership to modernize how they build and run software-heavy vehicle programs.
State Farm is an insurance company. The point here is that people with data and analytics backgrounds are moving between industries, not staying only in car companies.
Meta is a major tech company. It’s mentioned to show that the same kind of software leadership automakers try to hire can end up going to other big tech firms instead.
They’re talking about a huge pay package—tens of millions of dollars—to attract a key person. The idea is that big money is needed to pull talent away from startups.
The hosts are describing how big old car companies try to hire tech people from startups. Since startup workers may become rich later from stock options, the car companies have to offer very big pay to get them to switch.
Nissan is a major legacy automaker, and the hosts cite an executive who left Nissan to join Rivian. It’s part of the broader argument that culture and operating style can be difficult for people moving between established automakers and EV startups.
Chorus Automotive is mentioned as a consulting firm. The hosts use it to explain that the person’s career includes non-OEM experience, which can influence how they handle culture changes when switching companies.
Jaguar is a well-known car brand. It’s mentioned here because the person they’re discussing previously worked there, showing how careers move between traditional automakers and EV startups.
Lotus is a car brand known for engineering and performance. The hosts mention it because it’s part of the person’s prior work history before moving into EV startup roles.
They’re using “operating system” to mean the company’s whole way of doing things—how decisions get made and how projects move. The point is that small tweaks won’t fix the bigger problem; the whole process needs to change.
A “big reorganization” means the company completely changes how it’s organized. The hosts are warning that if you do it the wrong way, it can disrupt the business and hurt results.
They’re saying more Chinese cars are coming into the market, which forces other automakers to respond faster. The idea is that waiting too long can leave you behind.
Think of a relay race: you can’t just run—someone has to pass the baton cleanly. In companies, “baton passes” are handoffs between teams, and those handoffs can slow everything down if approvals take too long.
Project-based means you form a team to accomplish one specific goal, like a new part or a new process. If it works, you keep some of the same people and repeat the approach on the next task.
They bring up General Motors as an example of a big automaker with past cases of using smaller teams. The point is whether that kind of structure can help companies move faster.
CEO compensation is how much the top executive gets paid. It’s usually not just a paycheck—there can be bonuses tied to results, like company performance or quality.
Here, “quality” means how well the cars are being built and how few problems they have. If quality improves, it can lead to better customer satisfaction and fewer costly repairs—so bonuses may be tied to it.
Talent retention means keeping good employees from quitting. The segment suggests companies are trying to hold onto experienced people long enough to execute big changes.
They’re describing the auto industry as a place where new ideas are still being invented. That can make it more attractive to people who want to work on the future of cars.
“Auto Culture 2.0” is presented as a book title that frames how culture in automaking is changing—especially around talent, expectations, and how legacy automakers compete for people. It’s essentially a lens for discussing whether legacy companies can adapt to new workforce attitudes.
Remanufacturing is the process of rebuilding used parts to like-new or specified performance, typically with inspection, machining, and replacement of worn components. The hosts tease a future discussion about remanufacturing, which is important in the auto ecosystem for cost, sustainability, and parts availability.
LIVE
Speaker 1: Auto Line After Hours is brought to you by Alex Partners.
For more than forty years, we have helped companies and their stakeholders around the world harness opportunity, overcome challenges, and achieve outsized outcomes. Alex Partners when it really.
Speaker 2: Matters everybody, Thanks for joining us on Auto Line After Hours.
Got another great show for you today, right, Gary, Absolutely?
Speaker 3: John, Yeah, Well, we've.
Speaker 2: Got to tell everybody. We've got Jan Griffith, who is,
amongst other things, and author. She wrote this book called
Autoculture two point zero. We're going to be getting into that.
How do you change the culture at a legacy company.
We've also got Jackie Charnaga back from the Detroit Free Press.
Great to have you here again, Thanks for having me again.
Great and Jan by this time your debut, my debut on AAH. So Gary, all kinds of things to talk about.
Speaker 3: Well, I think we ought to first talk to Jan about culture. We talk about culture on the show a lot,
and we talk about the culture of places like Silicon Valley versus the culture of Detroit and the culture of De Dissublican Valley. And part of the thing that you
focus on is helping organizations in terms of their culture.
Speaker 4: I do, indeed, I do.
Speaker 5: Indeed, can I ask you a question? No, when you
hear the word culture, what does it mean to you?
Speaker 4: Guys?
Speaker 3: So is it like I make the famous line about when I hear the word culture, I reach from my revolver.
Speaker 5: No? No, what does it mean to you? I'm kidding.
Speaker 3: It means it means the interpersonal environment that exists within an organization, whether it's for people sitting on the set, or it's a factory full of people, or an office building full of people, or a church full of people, that there's a shared not necessarily objective, but there's or mission, there's a shared understanding among these people, and these people choose to be a part of that culture.
Speaker 5: Okay, that's very big part of it.
Speaker 2: Yeah, John boy garn it. I thought Gary answered the
question for me. Culture is the way an organization or
a group of people go about doing things with an accepted process, ethos more rays and they all sort of have this group thing that it results in their culture.
Speaker 6: Yeah, Jackie, what do you say, see, like the way that people communicate with one another, that's a good part, and like.
Speaker 4: If that's towards that shared goal.
Speaker 6: I think about it in terms of an acknowledgement of the system and it's sort of its rewards and consequences.
So when I think about like the culture, I think about sort of like every individual's understanding of where they fit in that system.
Speaker 4: And where their career would go.
Speaker 6: Obviously, in terms of a business situation, I don't typically think of culture and other institutions. Obviously for our purposes,
it's business. But the idea of where you fit as
a Cogona machine and as well as like what the machine is intended to do.
Speaker 5: That's really interesting responses. And the reason that I ask
you that question is because everybody has a kind of slightly different understanding of what culture is. And often when
you say the word culture, people roll their eyes and they go, oh, that's hr. That's that hr stuff, that's
that soft stuff that doesn't really mean anything. But when
you start to talk about culture and think about culture as the operating system for your business, it's how you think, it's how you behave, it's how you make decisions, and it's how you operate. So these days we talk a
lot about a playbook. It's your playbook that it's your
operating system, and what we're talking about in automotive is rewiring our entire op rating system. It's not about having
games in the breakroom. You know, That's not what culture is.
It's not about donuts on a Friday morning. It is
much much more than that. It is your operating system.
And people have to understand that before they can even begin to get their minds around what to do about it.
Speaker 3: So, okay, isn't it a situation though that if you're if you're in it, you don't know that it needs to be changed?
Speaker 6: Oh?
Speaker 2: Good, guess yes.
Speaker 5: Do you know how long we've been in this culture that we have in legacy automotive Land.
Speaker 2: Gary G.
Speaker 3: One hundred and twenty years.
Speaker 5: Since nineteen eleven. Frederick Taylor came up with the system
that was basically designed to have the managers make the decisions and the people, the workers just do the work, just execute, just do the work by design. And he
also came up with this idea of the silo, so instead of having one person run the factory, he thought, you know, what is a good idea if we have one person production, one person run quality, one person run maintenance.
So it was designed for an environment nineteen eleven. And
then Henry Ford took on those concepts in nineteen thirteen and came up with the assembly line and that was great because it was all about scalable efficiency. What is
scalable efficiency? And it was for the time, it was great.
I mean, Henry Ford were known for it. Detroit is
known for it, this assembly line approach. So we've gone
from being the global leader to the slowest kid in the room. That's what's happened right now because we're still
using a system that was designed for an environment that no longer exists.
Speaker 2: That's exactly right. So you know what see automatic and
you mentioned Detroit, but I would pretty much throw all legacy auto makers into there, whether they're Japanese or European.
I would dare say even Chinese legacy ones, the state owned ones. Uh, probably the Koreans. But how do you
change that? Because what, uh, what the legacy mindset is
up against now is the Silicon valley mindset or the startup mindset because you know, whether it's Rivian or Lucid, Tesla Blaze, the way, if you look in China at vyd or Neo or any they're operating on a Silicon Valley culture. If they use that ony yeah.
Speaker 5: I think an easy way to think about this is if you think about legacy auto as running a relay race. Right,
So this is how we you know, somebody designs it, right, and then they pass the baton onto manufacturing, they pass the baton to purchasing, and then purchasing passes it off to operations, right, And it's all about optimizing the performance of that one individual runner. And there's these handoffs. So
think of it as a relay race. Silicon Valley culture,
Chinese OEM culture. Think about a basketball team on a court.
They're all on the court together at the same time, the balls coming at them, conditions are changing, they're making decisions boom boom boom in the moment, and they're pivoting, and they have an objective and they're they're off to achieve to win the game. So that to me is
I mean simplifying it, of course, but that's the major difference to relay race and a basketball game.
Speaker 3: Or it's we played baseball and they play soccer.
Speaker 5: About That's all I got is.
Speaker 3: Think about this. So you have somebody who is really
really good hitter, right, Yeah, the individual is a very good hitter. You got somebody who you know, we all
know about pictures, right. You may not know anything about baseball,
but everybody's sort of justin Verlander, right, because famous picture individual doing the thing. If you look at what goes
on in football soccer, right, people are all playing as a team, insat the scrum. So it's not the individual
talent that necessarily makes or breaks things. It's the group dynamic.
Speaker 5: It's bringing it all together at the right time. That's
what this is all about. And I think what we
do in automotive is we look at this through a product lens and not a culture lens. And again culture
being operating system. So we look at this from you know,
we talk about Jim Foley and his Jaomi and how he loved the shoo me and he tore it down and brought the team in and love what Ford is doing, and they're looking at changing the way they build a vehicle. Great.
The re real that we talked about last week talking about bringing both facets of engineering together. Great, But you
said to John last week, what about purchasing, Because what we tend to do is we take these concepts, these principles, and we try to layer it on top of this silo system and it doesn't work. You've got to take
it back to the studs essentially and tear it apart, because how do you tell people they're going from running a relay race to playing on the court and playing basketball. Well,
it's totally different.
Speaker 6: I like the analogy of stars because I think we think about Silicon Valley, we think of individuals and their genius, and with automotive people who are in very high ranking positions, they still talk about their teams.
Speaker 4: It was a collaborative effort.
Speaker 6: There's a lot of you come into this autosystem and you blend in because the whole answer is not necessarily one individual genius and their fabulous salary and their accolades and their individual you know, insights. There are so many
inventions that are made and so many innovations in the Detroit space that not every person's name goods sound in history.
And that's an understanding here that I feel that is not quite the same in Silicon Valley. There's an idea
that you can blaze more of a trail and earn a reputation that it can carry you to different parts of the industry afterwards. So I'm interested in that as well,
because you're talking about how the system as it was then does not apply anymore. But we still do separate
the thinking about labor and then the doing of labor, and the people who think about the labor do tend to get paid a lot more than those who do it.
And right now the idea is not to I mean, we're trying to automate both, you know, where we're trying to automate more of the physical components of bringing a vehicle to life, but even the thinking about it has become so burdensome.
Speaker 4: We're outsourcing that to robots. So I'm thinking.
Speaker 6: About, you know, to your idea of these two ecosystems that function so differently, and what are the ways to bring culture in or out of it where there's individual achievement, but you know, the system still has a function.
Speaker 2: Yeah.
Speaker 5: No, that's a really good point with if you go back to nineteen eleven, which I wasn't around back then, by the way, but if you go back to nineteen eleven, it was very much just command and controls. It was
very much this top down approach, and it was a largely uneducated workforce and it worked. But that's not the
world that we live in. Anymore. We've got to bring
up and bring together the thinking, the collective thinking of the group of the stars, of everybody together. We've got
to bring that thinking up. We have to push decision
making down, and we're.
Speaker 4: Not good at that.
Speaker 5: In legacy automotive, we love to control things. We lead
with a compliance mindset, not so much conviction. It's about
follow the rules, do the thing, and have ten fifty in review meetings and approval meetings before we make the decision.
It's the system is slow, and we say, on one hand, we want speed and we want to empower our people, but yet we're not changing this operating system over here.
And they know, the Big three. They know what needs
to be done. If you look at the work that
all the big consulting firms are doing. And I've even
heard Mark Wakefield from Alex talk about this on your show.
They know what needs to be done. It's not like
there's some magic out here. But they've got to actually
focus on the operating system and not so much through the lens of the product.
Speaker 3: But j Okay, before the show, we were talking about the machine that changed the world, the Jim Jim walmag book, which came out when like.
Speaker 2: The nineteen eighties.
Speaker 3: Yeah, late eighties and okay, so he laid out the Toyota system. Okay, if you think about the Toyota system
that was different than the Detroit system that you had teams that worked on the line. All right, So if
I was sick, you would do my job because I was out, and Jackie would do your job and John would do Jackie's jobber would you know? So you had
cross functional teams. The engineering staff would go to the
gimbo where they would see where the actual stuff is happening. Right,
So we're talking about the Toyota playbook being open for everyone to read from more than the generation. Yes, okay,
So why hasn't it changed? I mean, and workers were
empowered with the and online. Something went wrong, you pull
the thing. If you were working in a legacy plant,
you know, you not say anything was wrong. You know,
you let it go be the next guy's problem.
Speaker 2: Well, you know, I think so much of the culture has been formed by rules, regulations, specifications and processes that built up over a century, all with the best intentions in mind to not make mistakes in the few you know, So you put these processes or procedures in place, and it's permeated every single aspect of the company, you know, everywhere.
It's not just engineering or manufacturing, it's everywhere, and to me, that's where the hang up is. So uh. You know,
earlier in my career I organized the dye Change Challenge where different stamping plants could compete to see who could do the fastest eye changes. And the Japanese had led
the way. The Toyota production system. It had a philosophy
why you had to do that because if you could do quick dye changes, you could do shorter production runs, you would have less inventory, you'd have less capital tied up, you'd have higher quality, blah blah blah blah. The whole thing.
This is very much a show me industry. You have
to show me. You can talk to your blue in
the face about theory about how to do this. As
soon as you show somebody in manufacturing, here's someone that's doing a die change in five minutes that takes you five hours. Then they get religion really quickly, So example
can do that. But getting to what you're talking about here, Jan,
the biggest hurdle I see to culture change at the Legacy automakers is blow up the specs and procedures, just wipe them, take it.
Speaker 5: Down to the studs. You got to start from scratch.
Speaker 4: You really do.
Speaker 5: And the Chinese didn't have to do that so much.
I mean they started with a clean sheet of paper and working together as a team was more natural to them.
And now we've got to change this whole silo thinking.
I think it's very very hard to transition from where we are today to where we need to be. You've
got to basically start stop for us.
Speaker 2: So how do you do that? I'm making you the
CEO of a legacy automaker. What's step one through three?
We'll take three, just to make it a little bit easier I do.
Speaker 5: I would I would put together a brain trust of people that knew the industry, but people outside the industry, people from different industries, and then I would take them offsite, put them in a separate location, and I would have them start to brainstorm what does this new organization look like where the processes and the functions are aligned around value streams, not optimized by silos and function And you know we've seen that. We've talked many times about purchasing.
I spent most of my career in purchasing, and we're taught to optimize to peace price. And when you do that,
you can flood the system with inventory. You can cause
quality problems. I mean, the list goes on and on
and on. So you need to answer your question. Step one,
get that brain trust. Step two, really start to understand
what those value streams, those value stream flows look like.
Build the system around it without any constraint to your thinking.
So really starting with clean sheet of paper, then you start a layer in. Okay, the objectives and the metrics
and the people and how does this work? You talked
about the eighties. Do you know in the eighties and
the mid eighties, I was part of a concurrent engineering team.
Boothroyd and Dewhurst came out, just come out with DFM Designed for manufacturing, Designed for assembly. I went through the
training and we sat there. It was bog Warner talk converter,
and we redesigned the talk converter, and we brought in I was a buyer, feisty young buyer at the time.
Brought in suppliers, steel suppliers, die makers, brought them all in and we really did it. And we also defined
the process that went along with that. Gary that was
eighty five, I think, and we have not been able to institutionalize that and adopt that as part of our operating playbook in this industry. Why since then?
Speaker 4: I feel it's pretty clear why.
Speaker 6: I mean, like a lot of like we've seen companies like Ford, They'll bring a skunk works team up from a small pocket. Let's take it away from the legacy
and all of our costs and expenses and administrative density, and let's just do what we can do in this small team. And the idea of like the next step
after that, after sampling what it could be or a better, more organic way of doing business, it's about taking that back to the main hub and making those changes. But
I think the industry is also very much in a if it ain't broke, don't fix it mindset, where if you have profitability, if you're doing well now, it is very hard to forecast a time when you aren't going to be doing well and changing any system that is rewarding you today, I think is difficult. And also to
the idea of like we know better than why hasn't that come up? It's very hard to be early career
enter into a company or an institution and see issues and get them to change, because the people above you or above them might know that they aren't perfect. But
the idea of listening to somebody a lower tier who has the least amount of power in an institution about the way that it should be harder to change, especially if it's institutionalized and it comes from above them. You
are easier to replace than the people who might be doing things inefficiently in a lot of ways.
Speaker 2: You know, I appreciate what you said about get this team, go offsite, map out the value streams and all that, but I got to tell you, I'm a really impatient person.
I am so type A. I am very results oriented,
and I like your other example of redesigning the torque converter, get a team together, start working on it right now.
I'm very project oriented, and I think that's the way that you affect culture change quickly, that you have cross functional teams working together on a single goal or single product.
And then once you art to see success with that, like you saw with the torque converter, like I saw with stamping plants changing their processes to do quick dye change.
I would even say, you know, when Ford went to develop the Maverick. They put together a small cross functional
team design, engineering, manufacturing, purchasing, sales, marketing, all in one room and there was only about fifty or sixty people there, and that program went lickety split. But then you have
this problem. If you have this great little commando group
i'll call it, but now you've got to put it back into the system because it's got to go, you know, get industrialized. And I think that's an issue that Ford's
going to run into with its skunk Works EV program right now. But to me, it's like, I don't want
more meetings to plan out what we're going to do.
I want teams getting together right now working on solving issues.
Speaker 3: So, Jenn, your torque converter, Okay, that was forty years ago. Okay,
So how come there were not lessons learned from that to today? I mean, so this is you know, John saying, Okay,
you have projects. So you go through a whole vehicle
and you have a project on the transmission and you have the project and the axle and you know, and so on and so forth. Why hasn't it happened?
Speaker 5: So we we're good at this, you know. And then
there's examples of concurrent engineering teams all over this industry.
I'm sure people are listening now, are going to watch she's talking about you know we have a current engineering team.
I'm sure you do. But then it goes back into
the silo structure, the mothership, and then all those behavioral norms of the mothership take place, all the reviews, and then you wrap that in a culture of fear where you're afraid to step out and make a decision. You're
afraid to do what you know is right in case you're going to lose your job. You and then you've
got this this massive list of goals and objectives and metrics that are weighing down on you, that are optimized for your silo, and it guess what dies?
Speaker 2: So how do you avoid that? How do you avoid
how do you get around that challenge of these great little teams then getting sucked back into the mothership and behaving like they always did.
Speaker 5: I think that's John.
Speaker 2: It starts at the top.
Speaker 5: It starts with the CEO. The CEO has got to
walk the talk, really really walk the talk. And when
you see examples of you know, fifteen different approval levels for things that should take you know, maybe one approval to take maybe five minutes.
Speaker 3: That are You've.
Speaker 5: Got to look at all these decision loops that we've got in automotive. If you start to map those out,
they are horrendous. And this compliance mentality. We got to
control everything, you know, we got to you know, we need people in the office four days a week. I
want to report on who is in the office and who isn't. Why we've got to start questioning every process
that we have. Why why is it taking so long?
Maybe we throw out an edict that says, you know what, reduce all the approval loops by fifty percent as a stock, just as a stot. Let's do that now something.
Speaker 6: I also think that because these companies are so old and they've had so many people working on so many projects for so long. I'm not going to say that
they're not diligent historians of their own work. But I've
talked to engineers at GM who mentioned, like there is a pitfall of accidentally duplicating an issue that they solved in the seventies because they weren't.
Speaker 4: In the room at that time.
Speaker 2: It happens all the time. So it happens all the time, and.
Speaker 6: So how can they learn from even their own company, their own mistakes. Where new hires come in, there's layoffs,
there's shake ups, there's so much turnover.
Speaker 4: In some instances, there are.
Speaker 6: Still people who have like thirty forty years of these companies who do remember some of these things.
Speaker 4: But if you don't have a.
Speaker 3: Many of whom were hiding under their desks, so then are getting fired.
Speaker 2: Now I'll give you a great example. So Ford built
the Tempo and Topaz at Kansas City. I can't remember
what they built before that, but they they had a model change. Some people retired. Well at the end of
the line, they stick a fuel nozzle into the you know, the the fuel neck, and they got to put a few gallons of gasoline in it. It's got to drive
out into the yard. It's got to be able to
drive onto their train or a truck. So they got
to put gas in it. And Ford had gone with
a plastic fuel filler neck for the first or not for the first time. It had been on that before.
Oh no, now I remember it was the Tempo Tope as they went to the the escape. So anyway, it
turned out in certain temperature and ambient conditions, after all day long of putting this fuel filler into the neck and it would build up static electricity until one day the guy on the line would pull out the nozzle and it would spark and cublamo, big explosion and a fire. Well,
simple solution. You attach a rubber strap that drags on
the g around, a rubber strap to the fuel nozzle and it grounds it. No more static electricity, you know,
uh spark. So they retool the plant, they start building
the escape there and like weeks later, coblamo. They had
forgotten that very thing. Now I would think today with AI,
you could put together UH an operating manual that doesn't doesn't forget those things. You know. Toyota does that with
their chief engineers. They keep a book of everything, all
the suppliers, everything that gone, how they solve problems. And
so when that chief engineer, the shoosa as they call them, when that shosa retires, he hands the book off to his successor. So anytime the new who has a problem,
they just go through the book. Oh, here's how we
solved that in the past. But I would think today
with AI, you could make that far more easy than you know, shuffling through a book to find it.
Speaker 3: But this means somebody has to to use the AI or read the book, okay. And so the knowledge exists,
people choose not to discover the knowledge. I mean, and
it was shocking to me. You were saying about how
there's fear in organizations.
Speaker 4: Yes, and.
Speaker 3: You know everyone probably in the auto industry, in executive suites in Dearborn, in Detroit and Auburn Hills and you name it, are all like, yes, we've read doctor Deming's work or we've studied with doctor Deming. You know, in
one of his fourteen points was drive out fear. Okay,
when did he make these points that it was? It
was more than half a century ago, and every executive in town would say, oh, yes, we believe in that.
Speaker 5: All that's yeah, there's no fear of my own is.
Speaker 2: Right, and so.
Speaker 3: Everyone believes that they're doing what they should be doing. Yeah,
Yet someone who's from the outside just looks at it and says, no, you're not.
Speaker 5: Well they're not. And it's not it's not just me,
I mean, it's all the big consulting films that are saying the same thing. And the proof is in the results.
I mean, how does it take a Chinese Ozhem to produce a vehicle, to launch a vehicle, was it twenty twenty months? Was this is forty months for a legacy
forty so just let's start start with that.
Speaker 6: Yeah, I mean it takes them longer, but the vehicles are perfect. You know, it's a long, slow process, but
they're safer that we don't have recalls or anything.
Speaker 4: I mean, it's the problem is like.
Speaker 2: Alert yeah.
Speaker 4: What Yeah, certainly not saying any records. I realize when
you're going yeah, I mean that's the idea.
Speaker 6: It's not that obviously, like there are fewer Chinese automotives in the market that have aged to the point where we can truly see how long, how safe they are, and what data we have compared to the other automakers.
But they're being asked to move quicker in a process that's in today extremely imperfect, and to move faster and to have what are we going slow for for oversight, for testing for quality control? And we're still not as
quick as in China. But obviously there's vast differences in
terms of what components they use and the intellectual property as well as the labor and on all of the other factors. But in terms of slow and steady wins
the race. That's not what we are hearing is going
to happen.
Speaker 2: Slow and steady work just fine when everybody was slow and stall when we had time. And now things have changed.
And look, this goes beyond the auto industry. The US
military is going through the exact same thing right now.
When you look at what NASA's doing, NASA is really picking up the pace really quickly because it recognized that the old way of doing things was too slow and SpaceX in particular, everybody up to you, you can move a whole lot faster than what we've been doing.
Speaker 5: Yeah, yeah, I agree. And we can't let this discussion
go without talking about the supplier involvement in all of this.
Because we talk about current engineering, we still treat suppliers in the auto industry as like outsiders. It's a very
transactional relationship. And I know as companies out there will say,
oh no, there's strategic partners, uh huh, Okay, they can say that, but then you look at the actual behavior, the culture, the operating book, the rule book, and we still keep them at arm's length. There is still this
element of throwing it over the wall to purchasing. Purchasing
goes out quotes, the supplier comes back, is driven by the lowest cost, and off we go and the cycle repeats, and we have got to get rid of that.
Speaker 2: Yeah, No, you're absolutely right. Management. We'll talk about a
suppliers are our partners. But I've said this for decades now.
So until they change how they compensate and reward their buyers, nothing is going to change. Yes, so they can talk
about partnership until they're blue in the face, but you're right, when it gets down to the final negotiations, it's all about peace. Price. That's it. Final.
Speaker 3: Stop.
Speaker 2: Now, there are some examples of that changing. I don't
want to say too broad brush it too much. There
is some recognition of identifying what they call strategic partners and getting them more involved. But as an across the
board thing, no, it's still the old let's get in the room and arm wrestle.
Speaker 3: Well, I mean, as Jackie pointed out, I mean many of these people of these companies have been there for a long time saying this works just fine. You know,
I'm heavy change. I'm happy you.
Speaker 4: Know it's the human element.
Speaker 6: I mean, all of your suggestions require logic, but it's the idea of you know, when you are elevated, the higher up you go, the more control, the more faith you have in your decisions.
Speaker 4: And if somebody is trying to.
Speaker 6: Usurp you or suggest otherwise that what you've known your whole career might not be the thing that your company needs to move forward, that's threatening. But I'm trying to
think of like the narrative of Silicon Valley and that storytelling, which is so different. It's iconoclastic, it's you know, I
started this myself in my garage and look at what I've built and who helped me build. It is far
less relevant than the idea, you know, and now that AI is going to be doing everything, it's the person who came up with the best prompt.
Speaker 2: Yeah, look, we're going to have to wrap up. Well,
I'm not going to say wrap up this discussion. We're
going to end the first half of the show because we got to talk about some of the top management and the compensation that they get, because Jackie, I know you've been working on that. But first, a shout out
to one of the very good consulting firms that Jan was just talking about, Alex Partners Will be back talking more about the industry right after this.
Speaker 7: The automotive and industrial sectors are undergoing historic transformation electrification, digitalization, supply chain reinvention, regulatory shifts. The pace is accelerating and
the pressure to adapt is real. This is not a
time for hesitation. It's a time for bold decisions backed
by fast, effective execution. You need a partner who understands
complexity from factory floors to boardrooms and delivers measurable results.
That partner is Alex Partners when it really matters.
Speaker 2: Hey, thanks for that support. Alex Partners really appreciated. Gary.
Do you know what today is?
Speaker 3: Thursday?
Speaker 2: Ah, that's a good guess. It's also April twenty ninth,
but it's Reman Day, Remnufacturing Day, Global remanufacturing day where you remanufacture products and instead of throwing them in the landfill.
Speaker 3: It's a good thing.
Speaker 2: It's a good thing. So just and we're going to
do a show next week on Reman. So I'm bringing
out a yeah yeah, yeah, that right in Yeah yeah yeah.
But let's weave Jackie in now, because you've been looking at executive compensation, and boy, Mary Barra and Jim Farley got nice bumps in their compensation. Even though their finances
were horrible, GM's profits dropped in half forward actually lost money.
And then you're looking at what they're paying these Silicon Valley types to come in. You take it from there.
Speaker 6: Yeah, So this week was annual proxy filing week, so we were able to see how much the highest paid of the Detroit three executives was paid, and it got the closest it's ever been to thirty million dollars and that.
Speaker 2: Mary Barra marye point nine.
Speaker 4: Nine point nine.
Speaker 6: So we can start there where obviously last year was extremely tumultuous, and GM is pretty quick to point out in that statement and in every statement that they've had for quarter after quarter a lot of things that are beyond their control. So they're focused on the strength of
the underlying business. So not so much as the tariffs,
but about fifteen percent of her compensation comes from performance metrics from things like autonomous vehicle development software, internal combustion engine vehicles, and electric vehicles. Electric vehicles were a bit
of a source subject for all of the Detroit three last year. We've written off some few billions billions of
dollars for each company for unused EV equipment or gently used, I guess, as well as broken contracts with suppliers who were told to gear up for this EV revolution that didn't quite take place, but the idea that help could the company lose so much money and the executives still make out pretty much? Okay, they were really highly favored
for how they managed the tariff situation. GM was predicting
between four and five billion dollar losses last year, but they only had about three point one billion dollars.
Speaker 2: Were they sandbagging us? I mean, I mean, listen, and
I have the greatest respect for Mary Bara, I truly do, but man, I'm accusing her of sand bagging. He exceeds
Wall Street expectations every single quarter. And when I see
that kind of performance, I'm like, they're sandbagging. They undersold
or in the case of the cost of the tariffs, oversold it. I'm just part of my job is to
ask these questions, So I'm asking so.
Speaker 6: The idea of what the goalposts were for the executives and where they changed during twenty twenty five. That's true,
and that's outlined in the proxy that they were compensated on EV sales and then that was changed in twenty twenty five in anticipation of these changes that they'd be compensated for lack of like how much they didn't lose essentially, but in terms of what how the tear of impact.
They did make a lot of changes last year. They
did quickly.
Speaker 4: These grove workers and close things.
Speaker 2: Look, I cut them a lot of slack. The tariffs
were completely out of their hand, and they came down really rapidly. You know, there was a little bit of
advance warning, but not a whole lot. But when it
comes to the ev ride offs, I mean, let's face it, you know, I look at something like the Bright Drop Van, total fiasco, and when you look at you know, you said Mary's being and I we got to talk about the rest of them too. Yeah, that's not just Mair.
Speaker 3: I mean Mary's making twenty nine point nine, Jim Farley made twenty seven to five. Mary's compensation went up one
point three percent. Farley's went up eleven percent. Explain that
to me, Well.
Speaker 2: You know this, I'm not going to explain it. This
is the job of the Board of directors to explain it.
Speaker 6: I think their their idea is that they did the best they could with what they knew at the time, and because of how slow these changes are in the industry, things like the bright Drop, things like their whole EV lineup.
Those decisions were made five years ago, ten years ago.
Billions of dollars went into all of these projects, from investing in the plans to the infrastructure needed to support them.
Speaker 4: And it didn't happen. And you know, it's our best.
Speaker 3: But Mary was in the seat when these decisions were being made. Farley was in the seat, and Ford when
these EV decisions were being made. Right, and yet they're
being rewarded. I never had an eleven percent raise in
my life.
Speaker 8: No, but you know what, listening to you talk right, because you said that they made the best that they could given the situation, would so that effect they're not right?
Speaker 5: No, okay, right, So that's what they're saying.
Speaker 2: Right.
Speaker 5: Try being a direct report to Jim Fowley or Mary Baa and saying the same thing, Well, you know, I did the best I could given the situation. They would
take your head off.
Speaker 6: Try being one thousand and four hundred people who worked at Cameo Assembly making those bright drops.
Speaker 2: Yeah, it'd been that's just bright drop. What about you know,
cruise automotive, the autonomous thing that went up in flames.
What about all the software revenue that was going to be generating billions of dollars by this time? And there's
other things that go on. What I'm getting at, are
there no consequences for being a CEO who sees your profit drop in half, write off billions of dollars? Your
sales are not growing on an inflation adjusted basis, Your top nine line is not growing. Are there no consequences
for this? How satisfied are the boards of directors with
what's going on?
Speaker 5: And what does that do for the culture? And what
tona you setting at the top that will then bleed into the rest of the organization.
Speaker 2: Yeah, it's a.
Speaker 6: Bad look, but it's the idea of if they could only move faster, if they could respond to consumer demand as it occurs, which they say that they can't, and then it's mostly regulatory. Everything that's changing is nothing that
they themselves. But when you talk to the suppliers obviously
who asked that question, how did you not know that the demand wouldn't be at the volumes that you thought?
Why were we told to make these investments in our company to hire these people to do all that was necessary to meet your deadlines and have that change. And
the other thing about the legacy system is that it's very easy to point to the person across town and say, look, we weren't alone. You know, we all thought this is
what was going to happen.
Speaker 2: Yeah, but here's why we all thought it. I mean,
you got to look at the reality. Governments all over
the world were saying, by twenty thirty or twenty thirty five, no more internal combined engines. You have got to you know,
you had these California mandates, very specific percentage amounts of cars that California can't even meet, by the way, and it was doing the best of any state. So you
had these ext in my opinion, extremely and I'm a big EV proponent, don't get me wrong, you had these extraordinarily unrealistic demands on the industry. So I understand why
they said, look, you know it's all going to be banned.
You know, there's all those government money coming into EV's we got to go that way where I don't cut them any slack. Is how did you possibly think that
you you, Jim Pearler, you told us that you were going to come out with a pickup that was going to be forty thousand dollars, it came out closer to sixty thousand dollars. You know, how did they They sold
it for.
Speaker 3: Like ten fifteen minutes for under forty So yeah, okay, but how.
Speaker 2: Did you miss that so badly? And what who in
the product planning and product development area ever thought that full size pickup drivers the most conservative owners in the business.
We're going to walk away from their V eights and their their eco turbo sixes and embrace elect They hate electrics.
So there was a lot that I understand why they had to go with evs, and I understand the pressure that was there, but the execution. Look, the products are
actually well engineered, they're just so damn expensive with very limited range and really missed the mark. So you know,
when you're an entrepreneur, you know, I love Larry Burns saying start small, think big, move fast. They didn't start small.
They started out with massive amounts of investment. And so
what I get back to is it's the people at the top that called those shots. There's been zero consequence
for those decisions. In fact that you've only seen their
compensation go up.
Speaker 3: Nice jobbing.
Speaker 6: You get it right, Well, how this has to do with Silicon Valley and what they want the salaries to sort of be in showcase, I mean, the idea of like why the electrification system happened the way that it did is once again like SpaceX galvanized NASA. Tesla was
first to galvanize the Detroit Three and other automakers. Look,
eeds can be profitable and sexy and people can want them.
And it was so wrapped up in the Silicon Valley narrative that it was exciting to pockets. And the Detroit
Three saw their market share slipping and they made decisions.
But because they work slower, because they have this takes a long time to get the machine moving that by the time it was up and running, the world had changed again, or it didn't change as much as they.
Speaker 1: Thought it was.
Speaker 2: I had another thing. They didn't even know what they
were up again. They just thought, Okay, you know Test
has got these cool cars, they're fast, they do over the Europe. That what We're just going to start doing
stuff like that they did. They didn't understand that they
needed a software defined vehicle. They did not understand that
they needed zonal centralized compute platform to be able to do what Tesla's doing. They just didn't know it. Now,
maybe there were some really smart people at out of Makers that knew what was coming, but it didn't filter down or up. I mean they got completely flat footed
with very nice legacy electric vehicles that they could never make any money on.
Speaker 6: Yeah, I think that, like that's the idea that Detroit was so focused on making the better engine that they weren't focusing on making the device, the computer, and that's how they were like blindsided by Silicon Valley. But much
like they talk about suppliers, you know, I could teach my people how to build this and make it ourselves, or we can buy it. They try to do that
with Silicon Valley tech talent, you know, by trying to move them to Michigan, by bringing them into the fold.
And this didn't happen last year. This has been happening
for year after year after year. About ten years ago,
I think that was like the main wave of this of look, we have to buy somebody, and your credentials of you worked at Apple, you worked at Amazon, you're used to these systems. Maybe you can teach us and
change us and then what's the upside for them. I
don't know how much we've seen because they leave before we have.
Speaker 2: You know, you get it.
Speaker 5: We see culture and get some and just crushes them like a bug.
Speaker 3: I may leave.
Speaker 6: I wrote about this last year, and in preparation for today, I went through my article last year and I was just taking note of everyone who's gone. So John Francis,
who used to be at Amazon and Starbucks. He was
GM's chief Data and analytics officer. He left in November.
Now works at State Farm. Uh Barff's Barris Stanak, who
was at Apple and Robinhood. He was a senior vice
president of Software and Services, product and Design. He was
one of the three that left life November. He's currently
vice president of product management at Meta. Dave Richardson also
left in the November, also of Apple, and Barrek Tarofsky.
He was the chief AI Officer, a position they created for him. He left after eight months on that job.
He's now an advisor. And then obviously there was Doug
Field at Ford, so he was there for a very long time and his departure was different than the others.
They felt that the teams under him had really matured and they were ready to move on without him. But
the idea of these people coming in and they have the talent, they're getting paid. We saw that with Sterling
Anderson with this massive package forty million dollars carrot to help GM with this transition. And now all those people
who love not every single one of them, but a lot of their responsibilities now fall to him, who solve all of all of the autonomous the software, the product itself, and the electrification. Everything is under his jurisdiction, which is
why they wanted to have this big enticing package to get them.
Speaker 3: So my understanding though, is those three guys that left left win. Oh that's right after they hired Sterling Anderson.
Speaker 6: Yeah, well it would I think they were reorganizing, right, and then all of a sudden they all left.
Speaker 2: Yeah.
Speaker 3: Yeah, So they hire the new guy and your job basically is not what it used to be. So you know,
you're like, screw this, I'm going back to Facebook.
Speaker 2: Right.
Speaker 5: Yeah, there's clearly a pattern here, Right, there's clearly a patent.
We hire Silicon Valley people and then the legacy culture crushes them and they leave. So do you really think
that forty million dollars for one guy is going to change the entire operating system for general motives? Is is
one guy.
Speaker 4: Going to do it?
Speaker 2: I think it's possible. I believe in the power of leadership.
I've seen leaders come in and absolutely transform organizations. You know.
The stellar example was Alan Malalia, Yes, and you know, when I first met him, I thought this industry is going to chew you up and spit you out. And
why was I wrong? He turned things. So I believe
in the power of leadership. I don't know Stirling Anderson
well enough to say that he's that kind of leader.
Clearly GMC's you know, the potential to pay him that much.
I would add this, though, Jackie and I want to thank our viewer Dave Tuttle for pointing this out to me.
A lot of these Silicon Valley types have mountains of stock in the startups they're working for that when they vest could make them fabulously wealthy, and so the legacy automakers to lure them away have got to give them big pay packages, because otherwise you're not going to walk away from making the you know, big bundles of money to go work at a legacy one. But my question
for you, really, Jan is don't the CEOs at the top of these companies sit down and wonder how come we get all these Silicon Valley types Boom? They're gone
in no time.
Speaker 5: It's a pattern. Could we please do an analysis, a
deep analysis within the OEMs to understand and not just conjecture.
I mean really really understand what's happening in the culture, in the operating system that these people do not want to stay. Let's get that information, please.
Speaker 3: Well, I mean to be fair to Detroit though, and I know you guys aren't. So you know, we have
this thing of like people from Silicon Valley come and then we chew them up and spin them out after a very short period of time, or they choose to leave.
But there are people who go the other direction, right, They go from they go from traditional car companies to startups and guess what, they get chewed up and spit out.
So the guy Carl or jel Gruner, who had been the former president and CEO of Porsche Cars North America, went to Rivian he last and he became the chief commercial officer months okay ors driving eleven months. Another guy,
Tim Fallon, who worked for Nissan, went to work for Rivian two and a half years gone. Okay. And if
you look at the story of Peter Rawlinson, who we had on the show, you know, once upon a time and now he spent twelve years at Lucid, but you know, you look at his career. He spent three years at Tesla, right,
and he left and he said, my mother's sick in the UK. I've got to go back and take care
of her.
Speaker 5: But he's Welsh, by the way.
Speaker 3: Just and it later came out that he and Elon were not.
Speaker 2: Put the shock.
Speaker 4: Yeah I.
Speaker 3: Never heard, so you see, you see these things and so okay. So so where did where did he work
you know? Before that? Okay? He worked for this outfit
called Chorus Automotive, which was a consultancy. Where did he
work before that? Oh it was at Jaguar. Where did
he work before that? It was at Lotus Okay.
Speaker 2: So, so what you're saying is Silicon Valley types come into legacy auto makers and they're like, I'm out of here after a short time. But you're saying legacy people
go to the startups and can't deal with that culture.
Speaker 3: So I think it's all on your shoulders.
Speaker 4: Thanks.
Speaker 5: I think it's on the shoulders and the CEOs of the auto companies, they've got to understand this need for speed like never before. And you can't just come to
work and assume that there's this little bit of incremental improvement.
We'll adopt this here, we'll do a little bit of that, we'll do a skunk works here, we'll merge manufacturing engineering and application engineering over there. No, it's got to be
a deep, deep commitment, bone deep commitment to wanting to change the operating system in this industry, and they need to leave.
Speaker 2: But here's another question. Uh, you know, if you look
at the top CEOs right now, or you know, if you look at Jim Farley and Mary Barrant, they're in their early sixties, sixty two, sixty three years old. Are
they going to be the change agents? I kind of
think not, because what you're talking about is tremendous upheaval in an organization, which is very dangerous because you guys very ill. Remember when Roger Smith did the Big G Yeah, yeah, yeah,
you're old enough, man. So when Roger Smith, then CEO
of General Motors, initiated the Big reorganization, that was really the beginning of the end of General Motors. As we
used to know it. It destroyed the company. I mean
not that it destroyed it, that it went away, but that reorganization really hurt General Motors. Its market share went
into a nosedive from which it's never recovered.
Speaker 3: But Jent, couldn't you say that Roger Smith took a big swing. He's going to make a big change, not
to be the wrong one, but yeah, he tried, right.
I mean, so Ken, you're saying that you've got to now is the time.
Speaker 5: We all know when Chinese vehicles start to come in here, good good, goodbye, and good night, right, so we can't wait for that to happen. I was going to say
the time is now. The time was probably ten years ago,
but since we can't go back, it's.
Speaker 2: What's the old saying that to change?
Speaker 5: Yeah, the next best time is today right now, and it is go into the office tomorrow. Like, what are
we going to do to change this industry? What are
we going to do to change the operating system? Our
current operating system? All these approval levels, all these meetings,
meetings to prepare for meetings, We do that a lot in the industry, all this performative approval theater. Have you
ever seen that take place in a in an organization where people they got to you know, they got to tell you how much they know, and they got to pick apart your presentation, and it goes on for hours and hours, and you know, all of this stuff which is complete bull, it's waste, it's resistant in the system.
Let's go back to that relay analogy, that relay team analogy.
Anytime you've got to handoff, you've got approval loops, you've got decision making process, you've got resistance in the system.
You've got friction in the system. You've got to get
through that, eliminate that as quickly as possible, get decisions to flow. I'm not saying you just open it up
and everybody does whatever they want to do. Of course not.
But we have got to get better than where we're at today.
Speaker 2: I like the idea of going back to what I said before. Have it very project based. Whether it's coming
up with a vehicle componentry or a new business system.
Get a team together, get them working on it. If
there's success in that, take a good chunk of that team, put it onto a new project with new people coming in.
You've got to retain some of that core dynamics. If
you scatter the team all over the place, you dilute the potential efforts. If you take this core group, you
don't have to have everybody, but but enough of a core and start replicating that. And then same thing, you
take the sust the core success of that team, you start replicating additional to me, that's the way to do it. Okay,
But is there.
Speaker 3: A sufficient amount of time that these companies have in order to allow that to happen? No? Okay, So that's
that's the problem with that approach.
Speaker 4: You got to start right.
Speaker 2: Well, I mean, but I would.
Speaker 3: Go back to saying that they think they have started.
I mean using an example of the of the Maverick project right, right, so they say we did that right, and the Machi right, we did that right. And you know,
General motorsmdoubtedly has as many examples of things like we had a small team.
Speaker 6: I'm trying to figure because I see your point, but if the idea of what is the way to make it more efficient? So obviously GM had that reputation for
being a bloated company, and they've been very strict about trying to be as lean as possible.
Speaker 4: We see the layoffs every year.
Speaker 6: You know, they are very performance based with individuals, and there is the potential in that culture too, rather than collaborate, and you know, we go back to fear and what the fear is. You know, you've got the sticks and
you've got the carrots, and everyone's trying to just do their jobs that are constantly asking more and more of them.
But then the idea too, like to your point of who's going to lead the change at the top of the company. Who who are these heralders of a new culture?
Are we prioritizing the hypothetical culture and sacrificing experience or knowledge of the like? You know, we need both. We
need all of these different functions to work together. And
the conclusion of my story last year was you need the Silicon Valley mindset and the Detroit engineering knowledge. There
is so much that can't be done in this silo or that silo, but how to bridge the two.
Speaker 4: There's resistance to that.
Speaker 6: I mean, Sergio Marcioni said that like years ago, just like I'm not trying to create Silicon Valley in Michigan.
I'm not trying to do these things and putting in a slide or a ping pong table. Isn't good the
idea of compensating your workers for their work, but also push pressuring them to think of somebody that no one's ever thought of before. All at the same time, and also,
what is your job? Do we outsource that to a supplier?
Do we outsource that to another company? There's constant churn
and so much that has to be done, so you know, it's really we should be compensating the executives who have to oversee it all.
Speaker 2: Well, I'd like to know what are the boards of directors thinking, because that's where they're the ones who hire the CEO. They're the ones who determined the CEO's compensation package.
It's the board of directors.
Speaker 4: Yes, what's the logic and.
Speaker 2: Are they savvy enough of what's going on in the industry.
I mean, when you look at most of the boards, most of them have no automotive background, and I think it's good to get outside ideas, but maybe they have a little too much uh dilution at the board level.
I really think so many of the industry's the legacy industries problems rest with the board of directors.
Speaker 3: Yeah, but it's as Jackie pointed out when she's reading the proxy statements. I mean, like, things happened outside of
our control and we're managing it as well as we can.
So if you're on the board and you say, well, Mary's doing a good job, difficult.
Speaker 5: If I'd send that Gary, Given my career, I've been in supply chain and purchasing and manufacturing and sales all my career into ones, if I had said that to my boss, I would have been I mean you would. Firstly,
you looked at me like, what are you thinking? You know,
this is the environment you're in. Deal with it. It's
your job as the CEO to deal with changes in administration, to deal with tariffs, to deal it's your job to do that.
Speaker 2: Yeah, I like, I should go back and look at you know, compensation. CEO compensation over like a ten year period.
Has there ever been a time when the CEO's compensation went down? It's probably out there someplace.
Speaker 6: Yeah, well, Jim Farley didn't his compensation take a hit?
Speaker 2: Were the quality stuff?
Speaker 4: Yeah?
Speaker 5: I think you're right.
Speaker 4: Yeah, well, I mean it was part.
Speaker 3: Of the reason he got a bonus this year was quality.
Speaker 6: But going back to Sterling Anderson, the forty million isn't upfront for an obvious reason. It's some of it's time
to performance, but some of it's just time tied to time.
Just if you don't leave, if you stick around for at least through twenty twenty seven in the end of July, you'll you'll get more money. So for Sterling, and it's
the idea of like, we really need you here long just being in your position for long enough, and what that signifies. I think the idea too, is like there's
all this talent that they're bringing in than they're running out the other door, and how to keep them in the position.
Speaker 4: It's part of the culture.
Speaker 6: It starts in the culture, but it manifests in your external reputation.
Speaker 4: Who wants to work.
Speaker 6: An automotive who sees this as the frontier for innovation, high salaries, exciting change. And I think that's that idea
that they're butting up against, is that there's this demand for what a car should be or could be in the future, and they want everyone wants to be in charge of that future and profit off of whatever direction we're going in. But the whole industry is working at
the same thing at the same time, many of the same way, and.
Speaker 4: The idea that this is.
Speaker 6: A really sexy, cool, fun place to be or work.
That is something that is being buttressed up against, you know, the salaries, the exotic stories of Silicon Valley, which still hold I think more sway and not just this generation, but the next generation of like, what is the kind of job you want? What is the culture you can
expect once you get into that workforce? And for Michigan
or the auto industry, from people who are from here, it's very different from the view from the outside. And
whenever I do stories about talent and people coming here for school, people coming here for internships or jobs, I'm like, what did you think of Detroit before you moved here?
Why why did you come here? And I feel that
they don't ask those same questions when people move to the Bay Area in that same way. You know, the weather,
the things to do around town. You know, it's just
a different It's an uphill battle. And I think that
the more they bring in and the more they leave, the more it shakes the potential up and coming person thinking well, maybe this isn't a good place to land if everyone's leaving.
Speaker 3: So it should be pointed out that Sterling Anderson, who came to General Motors from were Innovation, which was making tising tructums and systems for the trucks, was co founder and chief product officer and he worked there for nine years.
Speaker 2: So this whole.
Speaker 3: Silicon Valley guys don't stick around very long. Nine years,
so we'll.
Speaker 4: See co founder it's gonna happen.
Speaker 6: They had to pay a lot to dislodge someone as the co founder status.
Speaker 3: That's right.
Speaker 2: So hey, look, I'm fortunately We've got to wrap this up right now, John Griffiths. Thanks, So oh your book
Auto Culture two point zero. Where can people get that?
Speaker 5: Amazon?
Speaker 2: Amazon? Okay, great? And Jackie, they can find you at
reap dot com. Correct, that's right, so great under our belt.
Yeah there, we'll believe that and we'll come back and do another show.
Speaker 3: Not talk while remnufacturing about remanufacturing.
Speaker 2: That's right, because it's Revan Day today. Thanks everybody for
having tuned in.
Speaker 1: Auto Line After Hours is brought to you by Alex Partners.
For more than forty years, we have helped companies in their stakehold around the world harness opportunity, overcome challenges, and achieve outsized outcomes. Alex Partners when it really matters,
About this episode
Jan Griffith’s “Autoculture 2.0” frames legacy automakers’ problem as a culture/operating-system failure, not a product one. The panel contrasts Detroit’s century-old silo, compliance, and approval-heavy “relay race” with Silicon Valley’s team-based, fast-decision “basketball” approach. They argue Toyota’s Toyota Production System shows what’s possible, yet legacy firms struggle to “tear down to the studs,” empower people, and preserve knowledge. The second half turns to executive pay, EV write-downs, and why Silicon Valley hires often leave—plus supplier involvement and the need to change incentives.
TOPIC: Company Culture PANEL: Jan Griffiths, AutoCulture 2.0; Jackie Charniga, Detroit Free Press; Gary Vasilash, shinymetalboxes.net; John McElroy, Autoline.tv
