Howes: GM leadership morphs to meet competitive tech challenge
General Motors Co. so far this week named yet another director from the defense industry and chose not to deny that it and Amazon.com Inc. are in talks to invest in Rivian Automotive LLC, a Plymouth-based maker of the RT1 electric pickup truck.
The two apparently disparate pieces of corporate news may have more connection than meets the eye, especially for Detroit auto folks accustomed to looking at GM through a traditional lens. With each passing week, the words “traditional” and GM increasingly don’t belong in the same sentence.
Start with GM’s directors. In comparatively short order, the 13-member board is morphing into a leadership group imbued more with technical, strategic and national security capability than the general business chops of old. That's precisely what a legacy automaker needs to make astute bets on the Auto 2.0 future of autonomy, mobility and electrification — or risk being left behind.
“As the industry enters an era of unprecedented strategic change, we believe the composition, experience and diversity … of directors will take on elevated importance,” Morgan Stanley wrote in a note Wednesday. “We see GM’s board … uniquely well positioned to contemplate the wide range of strategic decisions that accompany an industry in the early stages of disruptive technological change.”
Four GM directors — two of them women — are credentialed in geopolitics and national security: Mike Mullen, former chairman of the Joint Chiefs of Staff; Jami Miscik, CEO of Kissinger Associates and a one-time deputy director of the Central Intelligence Agency; Linda Gooden, retired executive vice president of information systems and global solutions at Lockheed Martin Corp.; and Wes Bush, chairman and former CEO of Northrup Grumman Corp., who was named this week to GM's board.
Two points: this is no accident, and, second, this is not an Old GM kind of board. Barra served on the board of General Dynamics Corp. until she opted in 2017 not to stand for re-election. And her predecessor as CEO, Dan Akerson, joined Lockheed Martin's board just three months after leaving GM's top job in January 2014.
The strategic implication is clear: manufacturing, hard engineering, sophisticated software, safety imperatives and potential cyber-security threats are converging on the self-driving automotive platform, presenting tough strategic and "systems" challenges arguably more familiar to defense industry veterans than their auto counterparts.
The changing makeup of GM's board signals a deliberate transformation. Morgan Stanley says 23 percent of the directors possess a tech background, 46 percent are women — "the highest female board participation of any company under our coverage" — and GM's average board tenure is 4.8 years. By comparison, the average board tenure at Fiat Chrysler Automobiles NV is 6.9 years; at Ford Motor Co., it's 12.1 years.
Enter GM's mutual interest with Amazon in Rivian, the Michigan-based electric-pickup maker that wowed the Los Angeles auto show. The industry's excited reaction signals the next battleground in the AV race: developing vehicles large enough to carry and deliver packages, and more than a few people, to their final destinations.
Powered and guided by sophisticated, often over-the-air software, self-driving vehicles theoretically offer providers and passengers alike the potential to deliver people and goods the final mile. But one of the many worries is that such self-driving fleets could be susceptible to hacking — very similar to the kind of threats defense contractors routinely must anticipate, outmaneuver and stop.
“The automobile can be subject to malicious manipulation,” author Malcolm Gladwell said at the New York Auto Show, alluding to hacking problems suffered by such industries as banking as they've increased electronic services. “If I were a malicious hacker, I’d want to hack into 5,000 cars on I-95 during rush hour and cause a 9/11-type event.”
Nope, no accident that GM is loading its board with defense types. Or that the automaker and the world's largest online retailer, already partners in a package delivery service using certain GM vehicles, are interested in taking minority stakes in Rivian, the electric-truck start-up marking its 10th anniversary this year.
Already invested in autonomous start-up Aurora Innovation, Amazon needs electric trucks to service its sprawling logistics network and bolster a developing AV delivery fleet, Morgan Stanley says in a separate note. And GM needs to stake its electric-vehicle claim in the lucrative North American pickup market, the motherlode of profits for Detroit's automakers expected to finance the future.
Partnering and cross investing in the self-driving space by automakers and tech giants will not guarantee winners. But failing to take risks pretty much guarantees who won't win — which is exactly why companies like GM are loading up on a new kind of talent in the boardroom. They can't win without it.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.