When General Motors set out to find a new chief financial officer, it looked far beyond the ranks of company insiders that the car company has historically tapped for leaders. But while the man hired for the job — former Microsoft CFO Chris Liddell — hails from a vastly different industry and company, he could bring some lessons from the software giant that could help GM deliver on its green car ambitions.
Although the automaker has taken criticism in recent months from the Obama administration’s auto task force and others for lagging on innovative technology, Lux Research analyst Mark Bunger noted to me in an interview on Tuesday that GM has a track record of coming up with strong ideas, but then falters on bringing them to market. “Microsoft is the opposite,” said Bunger. You can debate the level of innovation at Microsoft (see GigaOM Pro profile), he said, “but you can’t argue with how well it’s commercialized innovation.”
In the short term, GM needs Liddell to help slash costs, turn a profit and pay back its bailout loans. As Bunger put it, the automaker’s in “a do or die situation right now.” In managing those cutbacks, Liddell can tap his experience at Microsoft from 2005 until last month — a period in which the computing company faced growing competitive pressure. For the long term, however — even as early as 2012, said Bunger — Liddell is “definitely gunning for the top spot” (i.e., the CEO position). And as the one steering the ship, Liddell could apply strategies from his four years at Microsoft at GM for managing and commercializing innovation.
On Day 1 of the so-called New GM — the company that launched this summer as much of the automaker’s assets transferred over to a firm controlled by the feds — we noted that financial resources may not be the biggest sticking point for GM as it tries to rebuild itself as a greener automaker. Rather, changing the culture to cultivate more innovation, swift action and cutting-edge technology, could be far more difficult.
Not that Microsoft offers a perfect match for GM’s weaknesses. Bunger noted that “huge differences” remain between the auto and software industries — from product distribution methods to variable costs. And while another automaker — Ford — has had some success in bringing in an outsider (Alan Mulally, from Boeing) to help it return from crisis, other examples of cross pollination between industries show the potential for failure. Bunger pointed to John Sculley, the onetime Pepsico executive who ousted Steve Jobs as CEO of Apple in 1985 and left the company nearly a decade later after several product flops.
Ultimately, Liddell may be most effective at GM if he can help the automaker surmount the challenges with which Microsoft is still struggling. The two firms are behemoths trying to adapt to increasingly competitive and fast-paced industries, as well as changing consumer interests. Apple’s Mac OS threatens Microsoft’s core operating system business and longtime hold on 90 percent of the market. And after giving its web and mobile efforts a back seat to the PC platform, Microsoft has trailed innovative and competitive breakthroughs from companies like Google and Apple.
Meanwhile, the auto industry’s typical vehicle development cycle has shrunk to 2-3 years, about half of what it was five years ago, and GM faces pressure (from the government as well as the market) to improve quality and shift its focus from high-margin trucks and SUVs to encompass more fuel-efficient vehicles in its lineup. It led the U.S. auto market in terms of sales for more than seven decades, but its market share has been in decline for years. GM gave up its lead in electric vehicle technology when it shelved its plug-in initiative in the 1990s, and saw Toyota enter and own the hybrid market virtually unchallenged.
Liddell has a tough climb ahead to help rebuild GM as a profitable company. Investments in advanced alt-fuel vehicles like the extended-range electric Chevy Volt, which has reportedly cost the company more than a billion dollars to develop so far, will be difficult for years to come. And yet without those investments, analyst Jacob Grose told us earlier this year, GM would risk falling behind competitors in the race to secure an early market lead with next-gen green cars.