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Wednesday, July 12, 2006

How can Rick keep Kirk at bay? Be like Carlos
Charles Child
Automotive News / July 12, 2006 - 11:16 am

It's clear that Kirk Kerkorian will not let up on Rick Wagoner, CEO of General Motors.

Kerkorian's implied threat to replace Wagoner with Carlos Ghosn is just a start. Kerkorian, the crazy-like-a-fox billionaire from Las Vegas, will keep prodding Wagoner to perform.

But I have a plan that might keep Kerkorian at arm's length.

OK, Wagoner is not Ghosn. But there's no reason why he can't act like the celebrated CEO of Renault SA and Nissan Motor Co.

Ghosn stood tall at Nissan by spelling out specific sales and financial goals after he took command of the troubled Japanese automaker in 1999. Under his first three-year program, called the Nissan Revival Plan, he said he would cut debt in half, return to the black and achieve operating profits equal to 4.5 percent of sales.

Moreover, he announced the goals publicly. If he fell short, he promised to resign. In a word, he was accountable.

Wagoner should do precisely the same thing. He should set concrete financial goals and tell the world -- including, of course, Kerkorian. So far, Wagoner has only spelled out directional goals, such as cut costs and improve products.

GM critics, insiders and outsiders, complain that the company's culture lacks accountability. Executives are rarely broomed for poor performance, even though they have collectively dribbled away 6.8 percentage points of U.S. market share in the last 10 years.

In-your-face leadership is the only way to change decades of bad habits at GM. Here is Wagoner's golden chance. An organization won't become accountable until the person in charge is.

If he stated Ghosn-like goals and met them, he could tell Kerkorian to back off -- with the support of GM's board.

Wagoner would have to lay his GM career on the line. But it already is.

You may e-mail Charles Child at cchild@crain.com.