By Robin Gareiss
InformationWeek
[Story won ASBPE award for best profile]

Ralph Szygenda is less than pleased with his 20-handicap golf game And with the trout that too often outsmart him when he's fly-fishing in Montana. But finding the time to improve either hasn't been easy for someone who's spent the past six years heading the IT transformation of General Motors Corp., a project that many brushed off as impossible before Szygenda even stepped foot in GM's Detroit headquarters.

Back when he joined GM, the carmaker was the largest company in the world, but market share was declining, its cars lacked personality, and its IT efforts, run by its subsidiary EDS in an outsourcing arrangement, were stagnant. "Executive leadership of IT was nonexistent at a time when the world's largest company was in transition," says Szygenda, 54, from his 34th-floor office overlooking Detroit.

Now the company is gaining market share for the first time since the '80s and posting a profit, and it ranks third behind Toyota and Honda in J.D. Power & Associates' quality rating, the highest ever for a U.S. automaker. Szygenda and a hand-picked team of veteran executives--he interviewed 300 people for the top 30 business-technology positions--have built a technical infrastructure during the past six years that played a central role in CEO G. Richard Wagoner Jr.'s effort to turn a 355,000-employee glacier into a real-time organization capable of market-leading innovation. "From his first day here, Ralph has challenged conventional thinking," Wagoner says. "He and his team deserve a lot of credit for enablng GM to move much faster." And they did it by spending $800 million less on IT now than GM did six years ago. "We've taken all of IT and rebuilt the entire network of this company," Szygenda says. "We want to be the best automotive company in the world and to be a real-time company. How? By taking time out of everything we do" (see "Time Trials," June 3, p. 36).

Business technology is central to that real-time vision--and to the progress GM has made. GM used to take 48 months to develop a new car. By changing its design processes using more collaborative infrastructure and 3-D virtual-reality modeling software, that has dropped to less than 18 months. CAD/CAM files used to take 45 minutes to upload; now they take two minutes, thanks in part to a new high-speed network. Improved automation has reduced the time it takes to deliver customer-and dealer-ordered vehicles from about 70 days to 30. GM Smart Auction, an online auction site that 4,000 GM dealers use to bid on used cars, eliminates the time and expense associated with physically driving a car to an auction site, saving General Motors Acceptance Corp., GM's financing arm, $400 to $600 per car. With the volume of cars sold through GM Smart Auction expected to double this year, that translates into $120 million to $180 million in savings.

Szygenda didn't get this job done by being an easy boss to work for. He holds outrageously long Friday meetings that tie up his 16-member executive team. He constantly reviews IT projects to make sure they're delivering a measurable business value, and he sets ever-higher standards for results. He's got, well, a bit of a short fuse. But he's also won the deep loyalty of his team by setting a vision for IT's place in the business and, when necessary, fighting to make it reality. "Ralph's one of the bravest and boldest CIOs I've worked with," says GM North America CIO Daniel McNicholl, who's worked for Szygenda for six years. "When he knows something's right, he'll take on God himself."

When Szygenda took the IT helm at GM, he had to create an executive technology group because there was no CIO, and EDS essentially ran IT for GM. He set his standards high. "All of the people reporting to me were CIOs at other companies with a lot of experience working with vendors," Szygenda says. He built an organization designed to create tension, picking IT executives he knew would challenge him and each other, and then having each of them also report to a business-unit executive. Szygenda makes decisions on big-picture, strategic directions, but not until he's heard a heated discussion. "Ralph's always got to have two sets of eyes looking at something important. That's a minimum," says Clifton Triplett, GM's information officer for manufacturing and quality. "Ralph likes tension."

Not surprisingly, the first several months of the transformation were intense. "We all thought, 'What did we get ourselves into?'" chuckles Kirk Gutmann, the CIO for global product development and service, who flies about 200,000 miles a year visiting GM facilities in 30 countries. "I knew if we could turn this thing around, there would be a high return. But there's no question there was a downside."

Plenty of people saw nothing but downside, convinced that GM would never change. Szygenda himself spent several months interviewing top GM executives before he signed on, gauging their commitment to change. But the common personality trait of Szygenda's team is a thirst for challenges that look insurmountable--and they haven't been disappointed. "I love going into a job where I don't know if I can do it," says McNicholl, the former VP of Whirlpool Corp.'s heating and air-conditioning business. "Build a new IT organization from scratch? Y2K right around the corner? It was that 'Oh my God' experience that made me want to do this."

Imagine a meeting room with 16 strong-willed business and technology executives who all have run their own shows for years. Szygenda may like tension, but he recognized the potential for problems. He hired executive coaches to conduct team-building exercises--including one in which the execs said something about themselves, and the others decided whether they were lying--and psychologists to analyze how the staff interacted at meetings. He organized off-site social activities, including ball games and fishing trips to northern Canada, so the executives got to know one another. And there's no shortage of on-the-job interaction, including the Friday team meeting that runs from 7:30 a.m. until about 2:30 p.m. and can get intense as executives report on project status. "There are moments of high energy," Gutmann says.

Szygenda changed his management style as GM's situation changed, says Gutmann, a former VP for Navistar International Transportation Group. In the early days, "Ralph had his hands on every lever," he recalls. GM has successfully tackled its most basic IT operating problems, such as installing a common PC desktop system, junking about 3,500 disconnected IT systems, and consolidating its 23 incompatible computer-design systems to one Unigraphics system. That's allowed the team to laugh a bit more often these days and to savor some success. The M.O. now: "To have fun by winning at business," Szygenda says.

Szygenda has been able to retain and motivate his executives by giving them room to do their jobs. They know they're fully accountable for their business objectives, which he sets with them. "I tell them clearly what I want and explain who does what," he says. And he's tough. GM is completely dependent on outsourcers to execute on IT strategy, but Szygenda holds his people responsible if a vendor doesn't deliver on time. "Every time you pick someone, you bet your job here," Szygenda says. "That's the way the marketplace is set up."

His executive team sees him as a demanding yet helpful boss with a good sense of humor. Like most good leaders, he's able to tap the style--delegator, coach, dictator, friend--that's needed at the moment. "Ralph, bar none, is the most demanding individual I've ever worked for," says Linda Taggart, group VP and CIO of GMAC and former senior VP of Bank of America, who says she knew five minutes into her 1998 interview with Szygenda that she wanted to work for him. "But at the end of the day, he gets the best from me. He can push us all to the wall, but he's as supportive a manager as I've ever had."

Track Record
A look at GM's financial performance over the past six years
Year Revenue
(in $ billions) Income
(in $ billions)
1996 $164.0 $5.0
1997 $172.5 $6.7
1998 $155.4 $3.0
1999 $176.6 $6.0
2000 $184.6 $4.5
2001 $177.3 $0.6
Data: General Motors

He's obsessed with IT's delivering measurable business value, whether it's from his vendors or from the internal staff. Szygenda is big on report cards. And once a target is met, he asks for more. For instance, Szygenda told a few of his executives that they each needed to cut $100 million from the IT budget within five years. They did it in two. Now Szygenda has mandated that they cut another $50 million each this year. "A lot of times you just don't know the results you're going to get, so why not set the bar high and go for it?" Triplett says. If the targets prove unreasonable, Szygenda is willing to reassess them. "He'll give you hell about not getting the results, but you can talk about them," he says.

Szygenda is the first to admit his quick temper, but he makes it clear that his team better not let that intimidate them into not mentioning a problem. "I might not be happy the first 10 minutes, but after that I'm trying to fix it with you," he says.

GM's technology execs know they can get Szygenda's ear when they need it. Szygenda expects his managers to execute on the details, but he also wants them to think strategically. "If you don't have vision, he'll help you find some," Triplett says. Voice mail, not E-mail, is Szygenda's preferred method of communication when his team can't reach him. Despite his jam-packed schedule, he almost never takes more than a couple hours to respond to questions from his executive team. "He's clear, reaches good decisions, and gives guidance. He doesn't leave us hanging," says Triplett, an engineering graduate of West Point and former CIO for AlliedSignal's engine division. Meetings are designed to draw out a lot of opinions, but Szygenda ends the discussion with a decision. Even if the executives don't agree, Szygenda expects them to execute his plan. "He's very focused on the team," Triplett says. "He doesn't reward a whole lot on being an individual."

Szygenda has had an amazing ability to keep intact a team of executives who are routinely recruited to join other companies. Granted, not many can touch the budget and global scope of running even a division of GM. Still, even through the dot-com craze, when headhunters and startups courted Szygenda and his team with CEO startup jobs, he lost only three members of the 16-person team he started with six years ago.

Perhaps it's his sense of humor that prevents meltdowns of key IT leaders who are pushed to their limits daily. "Ralph's a kidder," Triplett says. But his style of humor is one that takes time to appreciate. "You have to realize his type of humor; otherwise, you'll think he's picking on you." During a recent meeting with vendors, Szygenda asked if they'd like to hear from his managers. He looked around, counted five GM executives, and warned the vendors: "You'll get five different opinions."

Those relationships with outsourcers are the lifeblood of GM's IT organization. When he started, GM had already spun off EDS. Szygenda wanted to continue outsourcing the IT operations, but he shifted to a best-of-breed model so he wasn't beholden to any single supplier. GM doesn't employ any programmers or systems staff in-house. The internal IT staff consists of 1,800 people who manage GM's relationships with tens of thousands of IT staff employed by dozens of outsourcers and vendors, which include big names such as AT&T, Cisco Systems, EDS, Hewlett-Packard, and Microsoft. "We're in our third generation of outsourcing, when most companies are in maybe their first generation," Szygenda says.

Szygenda relishes the competition that vendors face to get GM's business, but he demands that they work closely together to deliver products. Every six months, Szygenda holds a meeting with GM's top suppliers and gives them report cards that grade them in about 20 categories and anonymously rank them against others. They can see if they dropped from third to sixth on the list of suppliers, but they can't see names of other suppliers on the list.

Yet Szygenda and his staff want vendors to succeed, and GM has gone so far as to help companies expand their business plans, at times in exchange for an equity stake in the companies. But the competition is intense, because there's no easy out for a vendor to say GM took a project in-house. "It's a free-market system," Szygenda says. "If you don't do well in executing or with working with other vendors, you won't get picked next time. They're only competing against each other."

HP CEO Carly Fiorina says Szygenda is a tough negotiator, but he also wants healthy suppliers. "He understands that without a real sustainable win-win, a vendor can't perform effectively over time," she says. "So he both drives a hard bargain for his business and his own shareowners, but he also understands that we need to have a win as well."

As successful an IT leader as he is, Szygenda, a self-professed "beach bum" who enjoys spending time at his home in Naples, Fla., didn't plan to head down the CIO path. He thought about being a physician, but the financial burden of medical school convinced him that engineering would be a better route. After serving in the Air Force, Szygenda worked 21 years at Texas Instruments Inc. designing computer systems for F-15 and F-16 military jets. The engineering tasks he performed and managed, such as CAD/CAM operations, gave him hands-on insight that has helped him at GM. He also learned that companies like Lockheed Martin and Raytheon could work together on some projects while fiercely competing on others, something that's demanded of his own suppliers at GM.

Szygenda wasn't looking to leave Texas Instruments, where he liked the work and his wife liked the location. Then a recruiter approached him about becoming CIO of Bell Atlantic in 1993, during a time when then-CEO Raymond Smith was trying to change from a phone company to an information and entertainment company. "Why did I do it? It was about transforming a company, not to become the CIO," Szygenda says.

That was a taste he couldn't wash away. When GM approached him with an even larger transformation, he made the move, but not until he could convince his wife to give up Virginia for a northern climate and convince himself that GM's leadership believed what they said. "CIOs often take jobs and are asked to do things that are impossible because the company doesn't really want to change," he says. Szygenda wrestled with the decision and discussed the pros and cons at length with George Heilmeir, a former colleague at Texas Instruments and then CEO of Bellcore. "I could tell it was weighing heavily on him," recalls Heilmeir, chairman of GM's Science Advisory Board and chairman emeritus of Telcordia Technologies. Heilmeir advised Szygenda to take the job, although he had his doubts that anyone, even Szygenda, could change GM. "The day after he accepted the job, he sent two dozen roses to my house."

What about the future? Apparently, retirement's not in Szygenda's plans. "I doubt there will ever be another CIO job. This is it," he says. He's excited about future roles for IT at the company, such as providing embedded systems in GM's vehicles. Maybe someday, he muses, he'll become a CEO. For now, though, he's content to finish his IT transformation at GM--and maybe improve that golf game.