GM's IPO — Hit It, Dinah!

For the first time since it entered bankruptcy reorganization in June 2009, a new high-flying General Motors stock returns to Big Board trading today. Its IPO was priced swimmingly yesterday, looking to be the second-largest IPO in U.S. history, according to preliminary reports.

Who better to greet the return of GM from the dead than Dinah Shore, with her serenade of "See the USA in Your Chevrolet" in the clip above.

I am showing my age here, but I well remember Dinah singing this advertising ditty in her television show in the 1950s, although my remembrance of this goes back to the late '50s and not 1952, the date of this clip. A superstar entertainer during that decade, Dinah had a long and close association with GM and its Chevrolet brand. "The Dinah Shore Chevy Show" ran from 1956-1963. According to this detailed account:

A GM spokesman told Time magazine in December 1957 that the company considered its link with Dinah to be "one of the most enduring love affairs in TV." Indeed, Dinah Shore was helping to make Chevrolet the most popular automobile brand in America. In the 1950s, Chevy sales in the U.S. averaged 1 million or more cars and trucks a year. . . . She became the "queen of General Motors" in its heyday — a super-salesman and more.

So, welcome back GM. For most of my 30 years at Directors & Boards, the GM board has been held in fairly — and, in many cases, unfairly — low esteem. There have been many good people who served on the GM board, which has been inordinately defamed over the decades. But rightly or wrongly, just saying "GM board" has been a kind of shorthand for a board that fiddled while Rome burned.

Perhaps now, as trading gets underway in this resurgent automaker (that is actually making enviable profits again), we relegate to the junkyard GM's reputation as a lemon in the world of corporate governance.

Alfred P. Sloan Jr.: An Idea-Friendly Guy

How do you present a new idea at a board meeting? Do you just lob it into the discussion? Do you "seed" the idea in advance of the meeting with the CEO and/or other fellow directors? Do you keep your mouth zipped if the boardroom is a no-new-ideas zone and everyone likes things the way they are?

This is a robust topic — as I was surprised to learn when I teed up the question for the readers of the Directors & Boards e-Briefing, the journal's monthly online newsletter. Click here to see how numerous and thoughtful the responses were that we published in the just-released June edition. 

This whole debate was instigated when I told the story of how one prominent executive was swatted back when she presented what she thought was "a great idea" at a board meeting. You can read that story here in my editor's note in the May e-Briefing.

As a capper to the above exchanges of opinion, here is one tactic guaranteed to ensure a free flow of ideas in a boardroom. Howard Guttman, a consultant specializing in building high-performance teams, tells this story in his recent book, Great Business Teams: Cracking the Code for Standout Performance (Wiley, 2008).

It concerns the legendary corporate chieftain Alfred P. Sloan Jr., head of General Motors at a much more auspicious time in the industrial behemoth's history. At a meeting of one of GM's top committees in the 1920s, Sloan said, "Gentleman, I take it we are all in complete agreement on the subject here." Heads nodded around the table. "Then," continued Sloan, "I propose we postpone further discussion of this matter until our next meeting, to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about."

A wonderful anecdote, no? And what a choice bit of wisdom for board chairman and members to apply to eliminate any doubt about whether new ideas are welcome once you step into a board meeting.

It also makes one wonder, doesn't it, about the fate of GM. Would the company be declaring bankruptcy this week if Sloan's philosophy on debate and dissent in the company's meeting rooms — a philosophy that presumably included the boardroom — had still been operative under successive managements and boards?

Say It Ain't So: 'Parsley on Fish'

Irving S. Olds, chairman of U.S. Steel from 1940-1952, once opened a speech by declaring, "Directors are like the parsley on fish – decorative but useless." 

An appalling statement, no? (That's Mr. Olds pictured above, seated at left signing documents.) 

I had occasion to resurrect this infamous quote when I sat in on Prof. Stew Friedman's class at the Wharton School today. A close colleague, Stanley Silverman, gave a guest lecture on CEO and board leadership to about 60 MBA students. It was a superb briefing, covering the highlights — and some lowlifes — that have marked corporate leadership during the past two decades of Stan's public and private company CEO and board service.

At one point in the class discussion, Stan turned to me to chime in with a comment. He didn't need to do so, as he was doing such a good job that I hesitated to try to supplement the wisdom he was passing along. I chose this moment to hit the students with Mr. Olds' brutal accusation against boards. I felt that this might be the worst thing they would ever hear said about a corporate board, so they might as well hear it while they were in school, in an historical context — and hopefully realize that from such a rock-bottom assessment the "stock" of corporate boards has risen inexorably in the years since.

But ... and isn't there always a but? In Stan's own presentation to the class, he splashed up in full-screen PowerPoint this observation by John Schnatter, chairman of Papa John's International Inc., taken from the Wall Street Journal: "Behind every Freddie Mac, Bear Stearns or Lehman Brothers who led their company down the path toward financial ruin, there was a board of directors that sat by silently and let it happen."

In other words, parsley on fish. Ouch.

And double ouch — this lecture coming on the day after the government ousted GM Chairman and CEO Rick Wagoner. A company on the brink of annihilation, accompanied by a government takedown of the CEO, looks suspiciously like more parsley on fish.

I tried to tell the students that at GM there undoubtedly is a board working feverishly to pull the automaker out of its death spiral. The GM directors I've known bear no resemblance to parsley. But who's to say that the final verdict on the GM board will be — "decorative but useless"?

I hope the students believe me. And I trust the students saw in Stan Silverman the leadership talent, managerial expertise, and ethical character that reflect the best that our executive suites and boardrooms have to offer. It's just that this hellacious recession is proving how hard it is to banish the ghost of Irving Olds as simply a curmudgeon from some long ago and far away era of corporate governance.

[Photo by Time Life]