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Robert Goodwin

Robert Goodwin

Robert J. Goodwin is CEO and co-founder of Executives Without Borders; former deputy assistant secretary of the Air Force and appointee at USAID, the State Department and the White House.

'Rapid' turnarounds can be years in the making

Question: After a well-chronicled, 30-year decline into bankruptcy, General Motors is now profitable again and going public. What does it say about its former executives, directors and union leaders that such a large, complex organization could be revived in less than two years? What factor best explains why leaders don't take the hard but obvious decisions necessary to prevent an impending disaster?

GM's turnaround is indeed remarkable, even if it took longer than two years to come about. Under former CEO Rick Wagoner, the company spent much of the last decade reasserting its commitment to quality. By most accounts, that strategy has paid off, as the GM cars on the road today are widely considered to be vastly superior to those sold just 10 or 15 years ago. At the same time, GM executives and directors slowly began to come to terms with one of the hardest decisions they ever had to make--to abandon the "a car for every purse and purpose" mantra and shutter brands that were simply not performing.

The decision to abandon the Oldsmobile, Pontiac, Saturn and other well-known GM makes was as painful financially as it was symbolically (the company paid more than $1 billion to buy out Oldsmobile dealers alone). But today, the wisdom of the more focused approach that has left Buick, Chevy, GMC and Cadillac as the major GM brands is apparent. Sure there was some short-term pain. But without the sacrifices made, a return to profitability--marked by this week's IPO--likely wouldn't have been possible.

Ultimately, these reforms weren't enough to save Mr. Wagoner's job, stave off bankruptcy or prevent a controversial government bailout. But to state that GM's turnaround was completed in a mere two years is to do a disservice to those GM leaders who saw the writing on the wall and summoned the courage necessary to make decisions that were, at the time, unpopular among their direct constituencies.
It's a lack of that same courage that most often deters other leaders from making similarly prudent decisions.

Look at the recent backlash against the recommendations put forth by President Obama's Deficit Reduction Commission. Whether you're a senior on Medicare, someone nearing eligibility for Social Security, a corporate executive or one of the millions of Americans who depend upon government assistance just to make ends meet, there was something in the commission's report that made you cringe. As a result, action on the commission's recommendations--which is, by nearly every account, necessary to prevent an impending fiscal disaster--is little more than a pipe dream. Until our elected officials stop governing by public opinion poll and start leading, I have no doubt that it will remain so.

The fundamentals of our economy and the talent of our people are strong, but it is our debt and entitlement programs that stall our recovery and long-term profitability as a nation. As with GM, rapid turnaround can come, but it will take hard choices and the courage to reset programs like Social Security and Medicare that are holding us back.

By Robert Goodwin

 |  November 19, 2010; 2:30 PM ET
Category:  Accomplishing Goals , CEOs , Corporate leadership , Crisis leadership , Making mistakes , Organizational Culture Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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