Why Tim Cook Won’t (and Shouldn’t) Take the GM Job

| Editorial

There has been some discussion lately about Apple's Tim Cook being eyed as a possible candidate for the GM CEO position. Here's why Mr. Cook probably won't, and shouldn't, accept any such offer.

Not only am I well familiar with Mr. Cook, but during my tenure at Apple, I have met and briefly talked with the man. My take is that Tim Cook is a process man. He knows how to manage inventory, obtain favorable pricing, structure commodity contracts, and attack foreign marketing and process problems.

He is also a cast iron son-of-a bitch when required, but that is good. When I was in the Air Force, I noted that just about any young officer could work his way up to Lt. Colonel (O-5 grade), but to make full Colonel (O-6 grade), you had to be capable of being a son of a bitch. Step on toes. Get something done against huge obstacles. And not worry much of you're liked. Mr. Cook is a great Colonel.

However, the GM job requires something more. It requires someone who is familiar with the car industry and won't have to spend a year learning the business. It has to be someone who can both delegate tough assignments, based on experience, and assume a visionary leadership. All this is at a time when Toyota and Honda are chewing up American car companies with better manufacturing, better quality control, and a greater commitment to advanced engineering. In other words, that new GM CEO must have technical astuteness in the car industry, its competitive landscape, and incredible insight into what needs to be done next.

GM needs someone who can do for GM what Lou Gerstner did for IBM in the early 1990s: save the company from extinction.

Tim Cook's success at Apple is based on not only his experience and talents, but also on his knowledge of the computer industry and the tutelage of one of the finest CEOs ever, Steve Jobs. In fact, the skills required for the GM job are more in tune with what Steve Jobs has to offer, not Tim Cook. Not that Mr. Jobs is a car expert. He just has a better temperament for the challenges of that kind of job.

The chances of continued success with Apple are amazingly high for Mr. Cook. However, an ego-driven venture into the car industry presents many pitfalls and opportunities for failure. No doubt, Mr. Jobs has had that conversation with Mr. Cook.

It's not a question of playing it safe. It's a question of matching your talent to the challenges and building on success. I doubt Mr. Cook should or would risk all that at GM. Especially since he's probably the CEO heir apparent at Apple.

Comments

prl53

I totally agree and add one more reason not to go to GM. I go rid of my last GM vehicle in 2000 after the engine cracked and the transmission leaked. The Astro van was only a few years old. I’ve had Toyotas since 1982 and am now a Toyota-only family (my older daughter snuck in a Honda before getting rear-ended—she bought a used Prius so we now have 4 Toyotas). GM can claim a better car and better mpg but I keep wondering how their mpg increased recently and can only look back at the modifications made to the mpg calculation that dropped import figures and seemed to raise US autos.

Tim, stay with Apple, you did a great job while Steve was out and will be rewarded.

david

Your example of Lou Gerstner contradicts your point.  Lou was a credit card/packaged goods guy, not a technology guy.
Of course I don’t want Cook to leave Apple, but I think the GM CEO can and should come from the tech industry.  I new mindset is needed to change the industry, not just GM.

John Martellaro

I was aware that Mr. Gerstner came from AMEX. Part of Mr. Gerstner’s vision was to sell off the PC business and focus on IBM as a technical services company, something that was needed and was also part of his expertise at AMEX.  I don’t see Mr. Cook as having the same applicable base of expertise, going from Apple to GM. But I could be wrong.

Caepan

However, an ego-driven venture into the car industry presents many pitfalls and opportunities for failure. No doubt, Mr. Jobs has had that conversation with Mr. Cook.

I hope Jobs told him the story of how he thought John Sculley was a great choice to be Apple’s CEO, and how that turned out for him and the company.

All Tim Cook would get from a job at GM would be headaches and (maybe) a golden parachute - which he’d need, since he’d most likely be unemployable in other corporations’ eyes.

davebarnes

GM is doomed.
It is a bloated bureaucracy.
It is insular. Especially in its management ranks.
And, it does not matter if its products are good or bad. They are perceived as bad. Howie Long cannot change this.

Brian Z Jones

It may be sadly true that even when GM is making good vehicles (like they are now), ppl still buy Hondas & Toyotas. The rep is terrible.

But, as a GM fanboi, it doesn’t matter to me. GM makes what I want, Honda/Toyota don’t.

-bZj

danmanteufel

Alan Mulally came from Boeing, and he is running the only non-gov’t American car company well. The next GM CEO should probably have a similar background.

david

GM is doomed.
It is a bloated bureaucracy.
It is insular. Especially in its management ranks.
And, it does not matter if its products are good or bad. They are perceived as bad. Howie Long cannot change this.

Sounds like Apple in the early 90’s.  The right dynamic leader can make a difference.

aardman

It took a generation for GM to develop its reputation for crappy product.  It will take another generation for them to rehabilitate their rep—provided they build world class cars consistently.  Like for 25 years consistently.  You win car buyers in their early twenties: first job, first car purchase.  If you give them a great ownership experience, you can count on them as a customer for life and they’ll buy more luxurious (and profitable!) cars from you as their incomes rise.  Sell them a crappy car though, and you’ve lost them for life.  GM lost a whole generation of buyers this way and those buyers are gone for good.  Pointless to try to sell them something that is ‘not their father’s Oldsmobile’.

If GM is to survive they have to target the people who are in their early twenties now, and they better have good, no, great product for them.  Unfortunately, the selling job is harder now because unlike Honda and Toyota, whose main competition back in the 80’s sold junk, GM’s competitors today are not building crappy cars.

xmattingly

One other issue that would be a major hurdle for Cook to be successful at GM: dealing with the union bosses. He has done well for himself in the board room, but I don’t think he would have any more success dealing with overpriced labor than the heads of any of the other American manufacturers.

JulesLt

Ah, the old argument that the real problem is the cost of labor (as in, American salaries) and unions - yep, what America needs to be is a lot more like China, with it’s workers poorly paid and living in fear of it’s employers and government.

Actually, the key isn’t the price of labour, but to raise productivity through process and technology, which does lower the relative cost of labour, and - if you can’t increase sales to match - lower the headcount.

It’s also funny how no one ever complains about overpriced management.

xmattingly

No one ever said US labor needs to be more like China. Economics 101: It’s a matter of supply and demand, stupid. American cars had been stockpiling on car lots for quite some time; in an ordinary business world that would mean cutting back on production or labor, but unions don’t see it that way: every line worker should be guaranteed their 40 hour per week quota and a fat paycheck, no matter how healthy the company is. Believe me, I’ve worked a union job - and your typical unionized bonehead’s solution when production is down is to work slower. And what was the answer to this pickle, as far as our own government was concerned? Cash for clunkers (a flash in the pan hat trick), and a massive bailout for a failing industry (sans paycuts for overpriced employees).

Naturally, the typical Obamalite solution is that, someway, somehow, technology will be our savior. Well, I hate to point out the obvious - but if you raise productivity through better automation or other refinements, you reduce the need for manpower. Thereby lowering the cost of labor. Failure to recognize in this solution is the fact that US auto makers STILL have to negotiate with union leaders, regardless of how much labor is needed.

Overpriced management is not the issue for this sector - believe me, I have plenty to say about the newspaper industry; so introducing a theory on what other people may believe - regardless of what they have(n’t) said about a subject doesn’t make your case.

Before you open your trap about a topic you obviously know little about, you might want to educate yourself first.

http://www.cnsnews.com/Public/Content/article.aspx?RsrcID=39499
http://www.heritage.org/Research/economy/wm2135.cfm
http://www.brookings.edu/opinions/2008/1204_big_labor_burtless.aspx

JulesLt

And you were doing well with your strawman call, right up until the last sentence, when you made one yourself.

You’ll also find, that reading what I said, I did mention that improved productivity = lower cost of labour, and without increased sales, equals job losses.

I wouldn’t dispute that there is over-production, and that intervening to save an industry from self-inflicted problems is a waste of tax.

What I would say is that your comment suggests that unions are the main problem here, as does your ‘typical unionized bonehead? comment. Before accusing me of not knowing what I’m talking about, perhaps you should do some reading up on C19th industrial working conditions, and the birth of the unions. (Or indeed, we need only look at working conditions in countries where they are outlawed).

Anyway I disagree with the argument that unions are the problem here - the main problem is poor products / strategy. 

As a comparison, consider the German auto industry, which is also highly unionised - but with a far less confrontational approach on both sides.

vpndev

Maybe Howie can be GM CEO ??

danmanteufel

I think xmattingly’s point still stands that Tim Cook has never had to factor unionized labor into running his business. Even if he were business Ghandi, it would be a tough learning curve in one of the most important aspects of running the auto business. It might make more sense to get an innovative tech mind or two on the GM Board of Directors.

xmattingly

Before accusing me of not knowing what I?m talking about, perhaps you should do some reading up on C19th industrial working conditions, and the birth of the unions.

No accusation is necessary when it is a fact. I’m sure your great grandfather appreciated what unions did for line workers with poor wages, long hours and horrible working conditions. But fast forward 100+ years, no matter how you want to spin your hypothesis, your taxes are paying for overfed employees who are most likely making a much better wage than you.

Yes, union members are by large boneheaded, and have a built-in sense of entitlement. If you haven’t worked alongside union employees, you don’t know.

Disagree all you want, but the problem with the big auto makers boils down to a break down in the ability to respond to supply and demand, and unions are a huge part of the issue. If wages are exponentially greater than the cost of doing business (which in this case they are), a business will struggle to be competitive on the world market.

JulesLt

Seeing as I pay over $4000 (equivalent) in tax per month, and the average GM salary is $40,000 per year, I think not . . .

My point is that wages are not the main problem - unfortunately, I can’t find the same level of financial detail about German car firms, but I suspect salaries are easily comparable with the GM average (even taking into account the new plants in former Soviet states) - yet these businesses have remained more profitable - even in the last 12 months, the majority of the German auto firms turned a profit, even if those profits are 10% of 2007 levels.

(The same also holds true for Japanese car firms, and even to a lesser degree with Korean ones, whose salaries are far closer to Western rather than Chinese levels).

To turn the conversation back to Apple - the average revenue per employee at Apple is close to $1 million. I’ve no idea what the average salary is. Interestingly, at GM the average revenue is still over $500,000 per employee - something else beyond salary is going on to convert that into an overall loss of $135,000 each ($95,000 on top of salary).

Again, I’m not disputing that GM is almost certainly employee heavy, uncompetitive, unproductive, and over-producing vehicles customers don’t want - but it would not be much more competitive if you halved everyones salary. Halving the headcount would only solve the problem if it was just over-production.

xmattingly

Seeing as I pay over $4000 (equivalent) in tax per month, and the average GM salary is $40,000 per year, I think not . . .

Good for you! So you’re an exception to the statistical average. That’ll earn you a nice pat on the back and a hearty hey-ho at your polo club. This supposed $40k per year - with no point of reference in sight - is yet again, your own theory. Even these guys who wrote in defense of union workers’ compensation not only declare the low estimate to be nearly $60k annual income, but they also reference the payouts still being made to former employees. For which every tax payer in the country is now footing the bill for. And for working stiffs like me, the extra tax burden does matter.

Yes, unions are not the problem, but they are an important part of the equation for US auto makers’ failure. What you’re not recognizing is how difficult it is for the auto makers to roll with the market, since every minutia of employees’ wages and benefits must be negotiated with the unions; which can often take months to come to an agreement. Even employee layoffs come with costly buyouts. Long labor negotiations and a hefty overhead for past & present employees + bloated inventory + a perceived lack of quality +[other issues] = (as I said before) an inability to respond to the supply & demand of market pressures.

Back to my original statement: If you roll back a decade to Tim Cook’s early success at Apple, it could largely be attributed to slashing lingering inventory and greatly reducing the lead time between manufacture and hitting the retail outlets. Our gov’run’ment already tried the slash and burn approach for auto, and all it provided was a temporary economic bump. Making the manufacture more responsive to market fluctuation? That would entail hefty and lengthy negotiation with the labor bosses. Employment overhead? I don’t happen to know what Apple employees make on the average - but given that over 1/3 work at their retail outlets, it’s a fair bet that Apple has much less overhead for their head count. So, with all the issues facing our government-financed auto making buhweemoth, I don’t think Cook would be able to succeed as he did with Apple. Sum’bitch or otherwise. smile

JulesLt

I think the difference in figures comes from looking at global, rather than US, salary, and salary vs costs (my rule of thumb is that employee costs are generally double salary). Even if that takes you up to $80 per hour, there’s still a big gap.

I don’t think Cook would succeed either, nor do I think the bail out was either justified or a good idea, given that most of the problems strike me as self-inflicted.

I do recognise the problems (timescale, etc) of negotiating with workers - the question is how come some firms working in even more regulated environments have managed to do it (I think the answer is in the nature of manmagement/labour relations).

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