Defense

GM: CEO Churn and Branding Problems

2 Dec , 2009  

Yesterday General Motors CEO Fritz Henderson stepped down.  Apparently the GM board, concerned that things were not changing quickly enough under his leadership, asked him to step aside.  Fritz was CEO for less than a year.

Churning through CEOs is not the way to fix GM. General Motors has many, many problems.  But perhaps the toughest problem is that GM’s brands are weak and muddled.  GM can make wonderful cars but the company won’t regain pricing leverage until the brands improve.  It is very hard to sell cars with a negative quality perception and a generic brand image.

Fixing a brand takes time.  Changing the perceptions of a well-known one can take years, and in some cases it simply can’t be done.  You can’t just roll out a commercial saying, “Look, our quality is terrific.”  People won’t believe it.

Compounding the problem is the fact that GM has little credibility with consumers.  Quality has been spotty for many years.  Everyone in the U.S. knows that GM has very big financial woes.  Fritz Henderson, featured prominently in GM advertising earlier this year and host of the Tell Fritz web page (www.tellfritz.org), is now out.

There is no quick fix for GM’s branding problems.  Indeed, the way to improve short-term financials at GM, massive discounts, cost saving efforts and promotion gimmicks will only make things worse for the brands.  Bringing in a new CEO dedicated to making some sweeping changes and driving short-term results is not likely to fix the branding problems. 

Repairing GM’s brands, if it can be done at all, will take time and dedication and stability, not a string of new CEOs determined to have an immediate impact.


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