HBS Classmates Defend Ousted GM CEO

The public and political pressure that led to former General Motors Chief Executive G. Richard Wagoner’s resignation may have unfairly overshadowed his part in reinventing the company after its decades-long decline, said several of Wagoner’s Harvard Business School classmates.

Wagoner, who graduated from the Business School in 1977, stepped down on Monday at the request of the Obama administration, which has sought to force more rapid changes within the three beleaguered American automobile manufacturers that have received assistance from the administration’s multi-billion dollar bailout fund.

GM lost $30.9 billion last year, and its share price has fallen to as low as $1.27 from a high of $35 three years ago. The company has been criticized for failing to anticipate plummeting demand for gas-guzzling SUVs and neglecting to explore energy-efficient technology, causing it to cede U.S. market share to foreign competitors such as Toyota.

In particular, analysts have recently attacked Wagoner for the restructuring plans he enacted during his eight-year term as CEO, which included dozens of plant closures and thousands of worker layoffs, describing them as too little, too late.

Several of Wagoner’s classmates, however, called his forced departure a unjustified political sacrifice to appease growing public dissatisfaction with big business.

They pointed to GM’s success in expanding global market share and negotiating contracts with the powerful United Auto Workers union as evidence of the progress the former CEO had achieved. The blame, they said, falls largely on the crippling worldwide economic decline that has hobbled GM’s plans to reinvent itself.

“He was well on his way to being a folk hero,” said Desmond C. Wong, who was in the same section as Wagoner during his Business School years. “Unfortunately, the current political climate in Washington is such that whoever’s a public face gets fried to a crisp.”

Wagoner was known for being “polite to a fault” and “self-effacing” both during and after his time at Harvard, according to sectionmate David G. Offensend.

But in his attempts to reform GM, his proclivity for “understatement” may have hindered efforts to convince a doubtful public that the company was aggressively moving forward with quality improvements, Wong said.

Despite his public pillorying, many of Wagoner’s classmates expressed their affection for the student whom “everybody wanted to be around.”

“I have heard from a lot of our sectionmates in the last 48 hours,” Offensend said. “Everybody is somewhat angry and somewhat sad. There’s a lot of support and affection for Rick.”

—Staff writer Athena Y. Jiang can be reached at ajiang@fas.harvard.edu.