Operational Plans
An
operational plan
focuses on carrying out tactical plans to
achieve operational goals. Developed by middle- and lower-level managers, operational
plans have a short-term focus and are relatively narrow in scope. Each one deals with a fairly
small set of activities. We also cover operational planning in more detail later in this chapter.
LEADING THE WAY
Setting a New Direction for General Motors
General Motors is over a hundred years old, and for
much of that time was the world’s dominant automo-
bile manufacturer. But rising employee health care
costs, an onslaught of new foreign competitors,
and high wage contracts with its major unions
severely weakened GM in the early years of the
twenty-first century, Perhaps it is no surprise, then,
that GM was knocked to the mat when the global
economy plunged into recession a few years ago.
The auto giant lost $38 billion in 2007, another
$32 billion in 2008, and was forced to declare Chapter
11 bankruptcy. Using Chapter 11 protection, GM
cancelled several joint ventures, renegotiated some of
its labor contracts, shed brands like Pontiac and Saturn,
lowered its operating costs, and reduced its debt. And
when it emerged from bankruptcy in 2010, the firm was
ready to compete in new and different ways.
To the surprise of many observers, Daniel
Akerson was appointed CEO of the new GM and
charged with leading the company back to profitabil-
ity. His appointment was unexpected because he
had no automobile industry experience—he is an
electrical engineer by training, spent several years
as a Naval officer, and had worked in the telecommu-
nications, technology, and private investments indus-
tries. To the naysayers, he “wasn’t a car guy.” And to
some, that doomed him to failure.
One thing he did have, though, was a long history of
effective leadership. Akerson had been successful at
every stop along the way, and was consistently hailed
as both a strong leader and an astute manager. In his
words, a CEO’s role is “to articulate [the] vision, and a
strategy, what you want to accomplish.” And virtually
everyone who ever worked for Akerson agreed that he
played that role with integrity and effectiveness.
While his detractors expected him to fail, those
who knew him expected just the opposite. And
as things developed, they were right. Following
Akerson’s appointment and GM’s emergence from
Chapter 11 in 2010, the firm has been on a consis-
tent upward trajectory, regaining lost market share,
launching successful new products, and posting
record profits—$25 billion in 2012. His supporters
attributed his success to a consistent message of
product quality, innovation, and openness to change
(traits apparently not found at GM for a long time).
Akerson also spent a lot of time out in GM factories
talking to the people who build the cars and in GM
dealerships talking to the people who buy cars.
What happened next was even more amazing. In
late 2013, Akerson was just starting to think about
his replacement when his wife was diagnosed with
cancer and he decided to step down sooner than
anticipated. Akerson informed the board that he
thought the best candidate to replace him was
Mary Barra, the firm’s executive vice president of
global product development, purchasing, and supply
chain. The board quickly decided that Akerson was
right and appointed Barra to the position of CEO in
January 2014. This marked the first time a woman
has ever led a major U.S. auto company. So, what
does the future hold for Barra and GM? On the one
hand, she will likely have to deal with sexism from
some quarters and still faces stiff competition from
both domestic and foreign rivals. A major product
recall and allegations about a cover-up of defects
leading to that recall will also pose challenges. But
others believe that GM has been successfully trans-
formed from a staid, old car company into an innova-
tive
and
flexible
company
that
will
remain
competitive for a long time.
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