1: It was January of 2014. Mary Barra was in her early days as CEO of General Motors when a major crisis hit. The carmaker had been implicated in a number of fatal crashes due to faulty ignition switches.
“When you have a crisis, it’s not like you know the significance of it immediately,” she recalls in CEO Excellence by McKinsey consultants Carolyn Dewar, Scott Keller, and Vikram Malhotra..
“On the day you learn about some bad news, you don’t initially think, ‘Oh, my gosh, this is going to be a huge crisis,’ but as the events surrounding the ignition switch began to unfold, we quickly realized the situation was serious.”
Mary responded by reaching out to mentors, including Warren Buffett, who shared his mantra when he stepped into the CEO role at a troubled Salomon Brothers: “Get it right, get it fast, get it out, and get it over.”
One of her first steps was to assign five leadership team members to meet every day to deal with the unfolding crisis.
“Often in the early stages of the crisis, the team had more questions than answers,” Carolyn, Scott, and Vikram write, “so [Mary] kept sending them off to get the answers. Sometimes, they met for two hours; sometimes, it was twenty minutes, but she kept in close contact.
“In the meantime,” they note, “she told the rest of the leadership team to run the business–to drive sales every day and keep vehicle programs on track.”
Mary seized on the events as a way to accelerate what she saw as a needed culture change at GM.
“As we got into the crisis,” Mary says, “we said, ‘These are our values, and they’re not just something we paste on a wall. We’re going to live them through this difficult time.’ With ‘putting customers first’ as one of the values, we said, ‘We’re going to be transparent. We’re going to do everything possible to support the customer and everything possible to make sure something like this never happens again.”
2: One mistake companies make when faced with a difficult situation is to stay silent while waiting for additional facts while hoping the crisis goes away. “As the crisis builds,” the authors write, “they often find themselves in a vicious cycle of reacting to the latest negative headlines.”
Mary actively fought against this tendency. “Certain members of our leadership team thought that if we put out a press release, it would go away,” she recounts. “I had to say, ‘This is not going away. We have to do much more. We can’t stay silent or communicate only through a press release.’ So we did a press conference against the advice of some.”
Several months into the crisis, Mary appeared before Congress. Representatives grilled her with harsh questions. In some cases, she responded by saying “she simply didn’t yet have answers, and wouldn’t until the investigation was complete,” Carolyn, Scott, and Vikram write
Mary explains: “I was highly criticized for that, but I’m so glad I didn’t try to guess what exactly the root issues were, because I would have been wrong. That would have made it worse. Then I would have been hearing, ‘Before, you said it was that, and now you say it’s this.’ ”
She and her team were proactive and transparent with the public as additional information was revealed. “They did whatever they could to help their customers,” the authors write. “In the end GM recalled more than 2.6 million vehicles and resolved thousands of personal injury claims.” The company paid a total of $695 million to settle various cases.
Mary was named “crisis manager of the year,” by Fortune magazine in 2014 for how she handled this difficult situation.
3: Looking back now, Mary continues to be deeply sorry for the human tragedy. “My big ‘a-ha’ in all of this is that sometimes as a leader you think you have a decision to make when you really don’t, because there’s only one right thing to do. Yes, you need to think it through, but you really don’t have a choice. A lot of times, people will say, ‘We’ve got this issue. It’s going to have this kind of impact on our financials.’ And I reply, ‘What’s the right thing to do? If it’s going to be a hit to the financials, that’s not great, but what’s the right thing to do?”
More tomorrow.
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Reflection: How can I ensure that my decisions during a crisis align with core values and prioritize doing the right thing, even when faced with financial or reputational risks?
Action: Commit to transparent communication, proactively addressing issues, and fostering a culture where ethical decision-making guides every response during challenging situations.
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