The theme of the recent 2012 Wharton Management Conference — “Changing the Game: Leadership in Crisis” — is an apt one for the auto industry. Daniel Ammann, CFO of General Motors, addressed these leadership issues in a keynote presentation at the conference and in a Knowledge at Wharton podcast with Wharton management professor John Paul MacDuffie, during which he discussed upcoming new product launches, the struggling auto industry in Europe, a strong partnership in China and how GM is getting rid of ‘bean counteritis,’ among other topics.

An edited transcript of the conversation follows.

John Paul MacDuffie: This is John Paul MacDuffie from Wharton’s management department. I’m here with Dan Ammann, chief financial officer of General Motors. Dan, welcome.

Dan Ammann: Great to be here.

MacDuffie: Dan, you only joined General Motors in the last couple of years. But with the benefit of hindsight, as you look at the leadership steps that [were] taken by the company executives and the board in the years right before the crisis, what’s your perspective on that?

Ammann: First of all, I would say we don’t spend a huge amount of time looking backward. We’re all about looking forward in the company right now and plotting out a successful future for GM, building on the base that we have today. Having said that, as we look at the time preceding the financial crisis … and into the restructuring period, a number of the challenges that GM faced [then] really go back further than just the few years prior to the restructuring. In many instances, they go back for decades.

I think it was a series of decisions over a very long period of time that got the company into the position it was in as we [entered] the late part of the last decade. Obviously our goal now is to take the successfully restructured company and really move it forward to the next level, so it becomes the winning car company in the world.

MacDuffie: You are now the head of the finance group at GM, which has quite a reputation … built largely around two images. One, that it was pretty predictably a path to the top of GM. Seven out of nine CEOs from the 1950s on came out of the finance function. And two, perhaps more infamously, that it was the bastion of the bean counters — you know, the clichéd clueless finance function that was remote from the real feel of the business of making and selling cars.

So we’ll set aside the first one about the path to CEO. We will have to watch your career at GM. But to talk about bean counters for a moment: Bob Lutz, who was a legendary automotive industry executive and car guy, is a fan of yours. I found a quote where he said recently: “Dan is the real deal. He’s already done a lot to strip stupid thinking and analysis out of the finance group. But ‘bean counter-itis’ is ever present at many levels and in all functions.” So talk to us about bean counter-itis. What is it, and how can you get rid of it in GM’s finance group?

Ammann: From the point of view of the finance function within GM, what we’re really trying to do is be a partner to the business to make sure that we’re involved in helping drive better decisions, and become integrally involved in all aspects of the business, from the beginning of the supply chain to the end of the sales process and the customer support at the other end. Our role is to put the right information into the hands of the people who have to make the business decisions, to be partners at a very senior level with those people as they make those decisions, be at the decision-making table — and uphold the accountability for the performance under those decisions as we go forward.

So in this business — which is low margin, capital intensive and very competitive — the role of finance is crucial to the success of the company. To be successful, we have to turn data into information and information into insights, insights that allow better business decisions to be made. In order to do that effectively, we have to be fully integrated into all aspects of the business, and that’s really what we’re driving our finance function to do today.

MacDuffie: I understand that you, yourself, are a car guy, a certified test track driver and an owner of vintage Cadillac convertibles, among other cars. Talk to us for a moment about any new GM products in any part of the world that you’re personally excited about.

Ammann: We’re at a really interesting point in the development of the company today. We have a huge wall of new products coming, if you like, in the next year or two, both in the North American market here, but also all around the world — critical product launches, vehicles that have been developed over the last couple of years since the company emerged from its restructuring. And we’re entering a very rich part of our product cycle. The breadth of the portfolio is really what’s most impressive, from my perspective. We have our new entry in the luxury compact segment, the Cadillac ATS, coming in, taking on and beating the BMW 3-series, which has owned that segment for so long. We set a very simple mission for the organization, which was to build a better car than the 3 series. We’ve gone ahead and done that.

We have a whole new full-sized truck portfolio coming over the next year or two here in North America. We are launching in Europe, at Opel, two critical new entries and new segments for us there, the Opel Mokka small compact SUV and the Adam city car — again, a new segment for us and a really great entry. We have new launches going on all around the world. Our business in China, Brazil, South America — we have essentially re-launched a brand-new portfolio of entries in those parts of the world as well. So we’re entering a very sweet spot in terms of our product cycle. We’re investing very heavily in our future. We have doubled our capital expenditure budget over the last couple of years, and it’s all about investing in the future, putting the right vehicles in the customers’ hands, offering the customer real value across an enormously broad portfolio all around the world.

MacDuffie: That’s obviously key, keeping new products in front of the consumer. As I heard you say at the conference this morning, “You can’t cost cut your way back to prosperity.”

Let me change tack here and ask you about the unique state of GM right now as a private enterprise with a large government stake. It’s an election year. You folks must feel under a bit of a political microscope. How do you manage amid all of that, probably often unwelcome, scrutiny?

Ammann: I think we’ve been more in the political dialogue than we might have wanted to be over the last several months. But we’re not letting that distract us from our core job, which is driving this business to long-term success. We’re focused on getting these vehicles launched and into the marketplace. We’re focused on making money. We’re focused on reinvesting in our future. And we’re not spending too much time worrying about the political silly season.

MacDuffie: Let me ask you about Europe. It’s been a recovery period for GM and for the North American industry here. Partly because of the period of suppressed sales that immediately followed the financial crisis, some of that demand is coming back. It’s enabled GM to post its best profits ever, in history, I understand. But Europe is obviously in a really tough economic position and Opel, part of GM, is really struggling.

Steve Girsky [vice chairman of General Motors] talked about this when he came to the Wharton Leadership Conference this summer. Opel has been losing money for 14 years. So in a terrible economic situation, what do you and the rest of the GM team think you will be able to do to turn around Opel when past generations of leaders have not been so successful?

Ammann: I think you have to look at the European industry in total, and then within that, where is Opel. European industry in total is very challenged right now. Demand is very low. Capacity is too high. That results in a very difficult pricing environment. And by our reckoning, none of our competitors are really making money in the European market. So you have an industry in total that’s losing a significant amount of money, and … we’re losing our share alongside that, if you like.

Fundamentally, what has to happen is a realignment of capacity, on the one hand, or supply and demand on the other. We are taking actions to right size our capacity equation in Europe. Others of our competitors appear to be taking some of the same actions at this point in time. I think our assessment is that the industry environment in Europe has gotten bad enough, if you like, that it’s become clear that a fundamental restructuring needs to occur.

Now in many ways, that’s similar to what happened here in North America in the 2008 and 2009 timeframe. But I don’t think it’s going to be as clean and as quick as what we went through here. I think it’s going to be messier. I think it’s going to be more complicated. And I think it’s going to take longer. But our sense is we’re at the point where there’s a much greater realization today than we’ve seen at any point in recent years that the European industry must restructure. We’re certainly doing our part of that. We expect our competitors will likely do the same. That will hopefully result in a more stable, better match between supply and demand. If we take that with any kind of economic recovery out in the long term in Europe, we’ll be back to a much more sustainable picture.

MacDuffie: One topic that’s been a bit of a flashpoint in Europe is Fiat CEO Sergio Marchionne’s view that the industry really needs to, in a coordinated way, take out capacity. I know he talked about Europe doing that in the steel industry at an earlier point in time. Volkswagen, in particular, seems to have pushed back and said, “Hey, wait a minute, we’re doing well. We’re not necessarily going to promise to take out capacity just because other companies are doing poorly.” They have said some pointed things about that.

It’s part of the larger problem of Europe — a lot of different countries having to think about difficult coordination at a time of crisis when they’re mostly used to operating on a national basis. Do you have any views on how realistic or feasible it is to think of a Europe-wide coordination of capacity reduction?

Ammann: One view I have is I’m not going to become a third party in the Fiat/Volkswagen back and forth. But to answer the question: As I said earlier, things are bad enough now for everybody. It seems to us that there’s a greater momentum, a greater realization, if you like, that there has to be a more fundamental restructuring. Is everybody going to hold hands and do it together in a unified way? I’m not sure I see that happening. But I do see greater pressure and a great necessity for a number of the players to act in the marketplace. As I said, it’ll be probably messier and more complicated than what we saw in the U.S. restructuring. But I believe we’re at a point where it does need to happen, and we’re starting to see some signs of progress.

MacDuffie: If I could just ask you one more Europe question. Some of what’s been in the news, some of the announcements out of Opel are a plan to reduce white collar and staff and executive employment and the like. Usually the overcapacity issue tends to be framed around closing factories and reducing blue collar employment. So I imagine a lot of people, in a sense, are watching and sensitive to this issue of where does reduction come. I just wonder what your sense is about those two different parts, because you can’t cost-cut your way to prosperity; you’ve got new product out there and you need to market it. What’s your sense about those different parts of your strategy for turning Opel around?

Ammann: As it was in the U.S., the turnaround of any business in this industry needs to be driven by product first. So we have continued to invest very heavily in product. For Opel, there are a couple of very important launches coming later this year, the Opel Adam, the city car, and the Mokka, the small SUV. Those are critical for us. But at the same time that we’re pushing on the product side, we are continually benchmarking, not just at Opel but around the company, to make sure that every aspect of our operations is benchmarked to the best within GM, but also to the best benchmarks that we can find externally. And so we will continue to right size and find efficiencies in all of our operations around the world until we get to really world-class levels of efficiency. Sometimes that involves reducing the number of employees we have, taking work out of the system to get more efficient. But where we need to take those actions, we will.

MacDuffie: Let me ask you about another part of the world, China. China’s been a very big success story for GM and continues to be, both your own brands, Buick first and now Chevrolet and some of the brands of your partner companies like Wuling. Again, some of this happened well before you arrived, but what’s your sense of what has helped GM to be so successful in China? What are the capabilities of GM managers that have helped them do so well in that market? And how do you then think about what looks like a coming slowdown in auto sales and maybe in China’s economy more generally? Have you got the team and the capabilities to manage through, not a situation of high growth, but of perhaps slightly stalled growth?

Ammann: Sure. The history of GM in China has been a success from the outset. Some of that was attributable to what I would call a first mover advantage, being one of the first foreign manufacturers to really take a serious position and develop a serious partnership in China. We have a very strong partner through SAIC, our main partner in China, and a really mutually beneficial relationship that’s developed between GM and SAIC through the joint ventures that we have. It’s really been a story of mutual success as we’ve gone there.

In terms of the Chinese economy and the current outlook, people talk about China slowing down, but it’s slowing down from double digit growth to single digit growth. We need to keep that in perspective.

MacDuffie: That’s pretty good compared to a lot of other places.

Ammann: Compared to a number of other places in the world. But we need to keep an eye on what the competitive landscape is, how much capacity is coming into the market, so on and so forth. Clearly a slow down at the same time that capacity is coming in is something that we keep an eye on. But we remain very bullish on the fundamental long term macro economic story in China. And we will, of course, carefully calibrate our business quarter-to-quarter, year-to-year as we move along that path to ultimately a very long-term growth.

MacDuffie: Great. Let me wrap up with a question that’s more future-oriented. Like any company, arguably General Motors’ future rests on the quality of the talent that you bring in, now and in the future, and how well you’re able to build an effective team. So I’m wondering how make the pitch to young people, [not only] in the U.S., but worldwide. I think going to big corporations and certainly big automakers has not exactly been the first choice of [those] Wharton students [who find] finance and consulting jobs more appealing. To bring in some of that top talent, what’s your pitch?

Ammann: I think the pitch is the same whether we’re recruiting a very senior executive or someone out of business school. And that is that we are in the middle of the transformation of one of the world’s largest and most important corporations. This is an incredibly fascinating, complicated and demanding business. We’ve taken a business that was in serious trouble, and we have successfully restructured. We’re at the point today where we’re very stable and strong financially. We’re making money, and we’re back in growth mode. That’s a really big and important change for this industry, which has been in a cost cutting phase for so long.

We’re back in a growth mode. We’re back in a reinvestment mode. We’re fundamentally transforming the way that things happen inside of General Motors. That involves a lot of the very deep talent we have in the company, but absolutely supplementing that with people whom we recruit from other companies externally, as well as new people coming in out of business school and so on. I’d say we’ve been very successful in attracting some very senior executives and very well placed people from other companies into our organization. We’ve been similarly successful and rapidly improving our ability to bring in talent out of the best schools into the organization, as people realize that this is a once-in-a-lifetime opportunity to get involved in one of the great corporate transformations of all time.

MacDuffie: Great. My bet would be that your appearance before our students today helped that process. So thanks very much for coming to Wharton and speaking to Knowledge at Wharton.

Ammann: Thanks for having me here.