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GM's new CEO needs to be ruthless Add to ...

NEW YORK - Fritz Henderson, General Motors' new acting CEO, is far better suited to making hard and fast decisions than ousted CEO Rick Wagoner, says a senior auto executive who has worked closely with both men.

"Fritz Henderson makes decisions very quickly," says the executive, who asked not be identified. "He examines the facts, asks the right questions and then makes decisions very quickly. Rick Wagoner wants to study the problem and is reluctant to commit to a decision."

I've been hesitant to comment much on Wagoner's departure for many reasons, not the least of which I think he's a very decent man and has been a hard-working if unsuccessful CEO. But I do believe President Obama made the right decision in firing Wagoner.

I mean, GM lost $82-billion (U.S.) over the last three years and the company's stock is close to worthless. All that happened on Wagoner's watch.

So did the Pontiac Aztek, which has gone down in history as perhaps the greatest automotive debacle since the Edsel. At some point a leader needs to take responsibility for mistakes made under his or her watch. It was time for Wagoner to fall on his sword.

GM now needs a leader who is willing and able to make bold and extraordinarily hard decisions - and fast. Wagoner, one of the best-liked auto executives in memory, is generally regarded as a decent man who ultimately did not act quickly enough to re-shape GM's business. And not over the last few months, but over the last two decades.

GM's market share and general profitability have been in a freefall since Wagoner returned to North America in the early 1990s as the company's chief financial officer under former CEO Jack Smith. Every major strategic decision made at GM in the last two decades has Wagoner's fingerprints all over it. He must shoulder much of the blame for what has happened at GM.

Some of what has happened has been good, but in grading what really matters in the corporate world are three things: market share, profitability and share price. By those measures, Wagoner's tenure was a disaster.

Sure, he led GM's move to a global product development system and today GM makes better and better looking cars and trucks than anyone ever would have believed possible a decade ago. And GM has a strong presence not just in China, but in other parts of Asia, as well as South America, the Middle East and Africa. And GM has done laudable research and development in any number of areas, from fuel cells to hybrids.

But under Wagoner, GM steadfastly refused to completely re-think its brand strategy in North America. Wagoner and his team tried to chop brands, but the $1-billion (U.S.) price tag for getting rid of Oldsmobile left Wagoner and company unwilling or unable to take the tough decision and get rid of all the rest of GM's underperforming brands. Instead, under Wagoner, GM added the Hummer brand. My belief is that GM really needs just two brands in North America - Cadillac and Chevrolet.

But in wandering around the New York auto show, talking to people about GM and the industry in general, I sensed that despite being a loyal soldier, and despite being an accountant just like Wagoner, Fritz Henderson is going to move fast and decisively and even ruthlessly. After spending quite a bit of time interviewing him, I believe Henderson just might have what it takes to gut the complacency at GM and push this company into the 21st century.

Rick Wagoner never could do that, despite having one of the sharpest brains I have ever come across. The qualities that make Rick Wagoner an excellent human being - loyalty, a sense of honour and duty, honesty and integrity - are all the things you'd want in your family and friends. But what GM needs in its CEO right now is a ruthlessness that Rick Wagoner does not have.

We know Fritz Henderson is a quick study and a fast decision-maker. But if GM is to survive and prosper, he will also need to display a ruthlessness that Rick Wagoner could never summon.

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