By Rana Foroohar
September 25, 2014

GM CEO Mary Barra was, appropriately enough, in her car when she heard the news that the company she’d been appointed to run two weeks prior was about to suffer the worst U.S. product-safety crisis in recent memory. It was at the end of a cold day in January, and her chauffeur-driven Cadillac Escalade was taking her home from the company’s headquarters in downtown Detroit when one of her lieutenants, product-development head Mark Reuss, rang with some very bad news. It was about the ignition-switch problem that would eventually lead to the recall of 2.6 million GM cars. “He said he’d just learned we had this problem with the vehicles and that we had to do a recall, and that it was large,” Barra recounts. “And then I literally can’t remember [what happened next], because there was a period of probably 30 days where–I don’t want to say it was a blur–but things were happening so quickly as we started to look through what we needed to do.”

Those 30 days were the start of a very difficult 2014 for GM. The ignition-switch problems have so far been blamed for at least 21 deaths, more than 500 injuries, four grueling congressional testimonies by Barra, a $400 million victim-compensation fund to be doled out by former 9/11-fund director Ken Feinberg and a damning internal investigation conducted by former U.S. Attorney Anton Valukas. The 325-page Valukas report confirmed the worst: GM had known about the switch problem since 2001, but because of a culture of silence, obfuscation and buck-passing, no one had taken steps to fix the problem. There are continuing investigations of GM by the U.S. Department of Justice, the Securities and Exchange Commission and 45 state attorneys general as well as more than 100 private lawsuits. Meanwhile, GM has been battered by the recalls of nearly 27 million more vehicles with different issues this year.

GM fired 15 employees who were determined to have been involved in the switch crisis, but Barra and her top team were exonerated on the basis that they had been unaware of the problem. “The day I read [the Valukas report] was one of the saddest days of my career,” says Barra, a 34-year GM veteran. “The most frightening part to me was that [the report] said everything that everyone’s criticized us about” over the years. “It was like a punch.”

It’s hard to imagine a new CEO being dealt a tougher hand. None of this was, as Barra puts it with grim humor, “in the glossy brochures.” Yet she has marched through her first year with good marks; her handling of the immediate situation has been lauded by many experts as a model for corporate crisis management.

Barra’s legacy, and GM’s future, will depend on much more than how she handles the switch crisis. Only five years after declaring bankruptcy and with a large chunk of its profit this year likely to be wiped out by the recall problems, GM needs to sell some cars. Barra is betting the company’s future on technology (she has committed to putting a nearly self-driving car on the road by 2016), luxury (GM announced on Sept. 23 that Cadillac would become its own business unit, with headquarters in New York City) and China, which is already Buick’s No. 1 global market.

She’s also trying to take back market share in trucks, which have higher profit margins than cars. In September, GM began selling two new midsize pickups that Barra okayed as head of product development: the Chevy Colorado and the GMC Canyon, which will squeeze out a segment-leading 27 m.p.g. (8.7 L/100 km) on the highway, thanks to a 200-horsepower, four-cylinder engine. By next year, more Barra vehicles–such as a yet-to-be-named Cadillac and five new Chevrolets, including a new extended-range Volt electric car–are set to roll off the lines.

Perhaps most important, Barra wants to make GM vehicles “the safest in the industry,” a striking goal given the switch crisis. To do so, she’ll have to change a dysfunctional corporate culture in which, as the Valukas report put it, “no single person owned any decision.” It is a problem that has been with GM for ages. The question now is whether a woman who’s never worked outside that culture, who was supported in college and business school by the company and whose father spent 39 years as a GM diemaker, can fundamentally change it. Plenty of smart people believe she can: Warren Buffett, who told me recently that he wished “her father could see her now,” bought a Cadillac as a show of support. Certainly, the GM workforce is behind her: as one senior staffer told me, “people were f-cking elated when she got the job.”

But some former insiders, like past GM CEO Edward Whitacre Jr., are more equivocal in their praise. The reality is complex. After spending time with Barra for multiple interviews and watching her interact with hundreds of employees, it’s clear to me that her status as a GM lifer is deeply wired into her identity, but she combines it with a carefully controlled independent streak that may ultimately prove the key to remaking the company.

The Insider’s Outsider

Barra, 52, is preternaturally energetic and likable in a down-to-earth, Midwestern kind of way. Our initial day together begins at 5:30 a.m. with an hour-long drive to a GM facility in Burton, Mich., in charge of assembling replacements for the faulty ignition switches. Despite the early start, Barra, who forgoes coffee in favor of a Diet Coke she keeps at her side, is alert and chipper. “I grew up in operations, and plants start early, so I’m kind of used to it,” she says. Despite the breezy chitchat, it’s not easy to get to know her. She’s wary and on message in our first interview, and only later, when I assure her that readers are interested in much more than the Valukas report, does she let down her guard a bit. We talk about her kids, a son who’s thinking about colleges and hopes to study bioengineering and a daughter who’s more of a creative type, into fashion and writing. Barra, who has been married for 29 years to Tony Barra, a consultant, is by her admission no domestic goddess; her daughter sometimes does the cooking. (They don’t have a housekeeper.)

An engineer at heart, she’s stylish but practical. At one point, I compliment her on her killer black suede heels. “Manolos?” I ask. “Yeah, I have a shoe thing,” she says, wrinkling her nose with a bit of guilt. “And they are really comfortable!” Later, when a Time reporter tries to verify Barra’s shoe brand, GM tells us that “Mary is a very private person and has requested that you don’t name the brand of her shoes.” Perhaps she’s concerned that we’ll emphasize her style over her substance, but I’ve asked plenty of male CEOs sartorial questions. How much they care (or not) can be quite telling.

It soon becomes clear that she is, like many working women, an expert in balancing the public and the private. She shifts gears effortlessly in one meeting from an analysis of the switch crisis to the geopolitics of China to a refreshingly candid discussion of work-life balance. “Any company will take 24/7 from you and not even feel bad,” she says. “You’ve just got to keep balancing, learning and adjusting, and kind of not sweat it.” I soon realize this is part of what explains her phenomenal popularity inside the company; she isn’t “leaning in” or sitting for Vogue spreads or using her position as the world’s highest-profile female CEO to make any particular statement. She’s just running a 219,000-person company that brings in $150 billion in revenue annually with more emotional intelligence and better communication skills than many of the men who came before her.

In that sense, Barra has already shifted GM’s culture–though culture is a word she deeply dislikes, in part because she’s walking a fine line, trying to change things without totally condemning an organization that many people, herself included, have given their lives to. “I hate the word culture, because it’s like this thing that sits out there,” says Barra. “What is it? It’s how we behave. It’s the stories we tell about the company.”

Today Barra is talking to about 300 employees at a town-hall-style meeting at GM’s Customer Care and Aftersales headquarters in Burton, which is responsible for the logistics of the ignition-switch recall. Clad in a simple black pantsuit, Barra sits on a stool, daytime-TV style, on a well-lit stage. Off to her side is a shiny black Camaro convertible, her current favorite model. She’s here because, as her minders tell me, this particular facility has been working long hours on recalls and has beaten the delivery goals.

This is plainly a morale-building mission. She talks up how well the “team” is doing (she’s all about the team), meets with workers who deserve special recognition, stresses the importance of re-establishing trust with consumers (“We won’t get a second chance,” she tells a group of middle managers) and tries to drum home the message of the newly rewritten GM core-values statement: the customer comes first. “We’re in an industry where, when people get a new car, it’s an exciting day,” Barra says. “Some people name their car!” The audience listens intently, feeling the love.

Smoothly, Barra turns a bit sober. “I’m a second-generation GM employee. None of us expected [the crisis]. But we knew we had to do the right thing, and we had to be transparent. We had to be focused on the customer.” Standing ovation. Barra takes questions, many of which begin with praise for her. “I just want to say how proud I am of how you are representing us and telling our story,” says a female African-American manager. Says another participant: “You’re running the greatest company in the world. You’re a mother. You’re a wife. How do you get some Mary time?” Everyone laughs. Barra talks about how she likes to sneak away to watch her kids play soccer or volleyball or ice hockey. Suddenly, it feels like we are on The View rather than in a corporate-crisis meeting.

This, I came to think, is Barra’s singular advantage. As a member of a family with 73 years of GM service, she’s the consummate insider. Yet as a woman–the first to lead a major automaker–and someone with a very different personal style from most of her predecessors, she seems more like an outsider. That ability to both project a sense of change and engender trust in a company that’s still filled with lifers is one of the reasons Barra got her job. Early on, her former boss and mentor Dan Akerson was referring to Barra as a “change agent.” Yet it’s a mark of how much more change GM still needs to undergo that a rewriting of the corporate mission to explicitly put the customer first counts as a big idea.

To listen to Barra recount the list of changes she’s orchestrated at GM–where she has held positions from assistant to the CEO, to engineer, to plant manager, to head of human resources, head of manufacturing and director of product development–is to understand how deeply dysfunctional the company has been for so long. “I remember when I was in HR, I changed the dress-code policy to ‘Dress appropriately,'” says Barra. Afterward, a manager in charge of tens of millions of dollars in business came to her with a request that she write a more explicitly worded dress-code policy so he wouldn’t have to have an uncomfortable conversation with team members who wore jeans or too-short skirts. That experience, says Barra, “was such a window into the company. A manager should be able to handle something like that.”

Indeed, Barra continues to struggle with getting even high-level staffers to take personal responsibility. Recently she got a call from a woman in charge of planning a meeting with senior staff. She wanted to double-check on who should attend, citing changes Barra had made to the “dynamic” of the meeting. “My note back to her was, ‘Well, who do you think should attend? Based on the agenda. You’ve been running this meeting for several years. Who do you think should attend?'” The next morning, a list was presented to Barra. “I said, ‘Perfect,'” she says, smiling.

Fixing all that is critical, not only for Barra’s success but also for anyone who gets behind the wheel of a GM car. This sort of “transactional” decisionmaking, as Barra puts it, in which everyone colors inside the lines of their own precise job description without thinking independently or “holistically,” helped create the ignition-switch crisis. Barra continues to insist that employees absolutely would have put their hands up if the switch problem had been properly understood to be a safety issue, but it wasn’t. The Valukas report supports her take while also stressing that GM employees were working in a culture in which cost cutting affected decisions on quality. The Justice Department will no doubt be parsing that narrative carefully.

In GM’s old-think view, the switch crisis was the result of a mistaken step in a long process: the engineer in charge of the switches redesigned the faulty part without renumbering it, thus obscuring a change that could have helped various divisions uncover the issue in mysterious reports of stalled cars over the years. But the mislabeling of the switch problem early on, as a “customer satisfaction” issue rather than a safety issue, also reflects an internal practice of hoarding rather than sharing information. People were afraid to pass bad news up the food chain. In management-theory speak, GM is a deeply “siloed” place. And that’s not healthy.

“We didn’t have world-class processes,” says Barra. “But then again, we also didn’t have world-class behaviors of ‘Hey, pick up the phone, make sure something’s done.'”

Change of this sort sounds basic, but in a company of this size hurtling with decades of momentum and practice in the old ways, it’s not easy–as any number of former GM leaders will tell you. “There was a sense of insularity,” says Whitacre, the onetime telecom executive who served as chairman and CEO of GM during its insolvency. “It was tough to get to know people and get a sense of the organizational structure.” Does he see Barra as up to the challenge of fixing it? Whitacre hedges: “I wouldn’t call her a change agent, but she certainly wanted to do things differently.”

Barra also gets mixed reviews from Bob Lutz, the former vice chairman of GM and a storied car guy who favored Reuss, the product-development head, for the top job. “I didn’t see her as one of the disruptive people in a meeting who would raise their hands and say, ‘Excuse me, Bob, but I don’t think, with all due respect, that’s going to work.’ She always came across to me as being nonconfrontational.” Still, says Lutz–whom no one would ever accuse of shying away from confrontation–he likes the fact that she’s an engineer rather than a financier, like most of the CEOs of the past few generations. “She’s always been on the side of the company that actually makes things. And that’s a good sign, because those people are way more grounded in the reality of what goes on as opposed to the financial folks who float at the top and delegate everything.”

Car Guys (and Gals)

Car Guys tend to have big Egos, Swagger and a certain street cred gained by doing things like putting elbow grease into their own vehicles and being able to recite model minutiae like baseball stats. (Reuss, the son of a former GM president, has a screen saver of a vintage Corvette he rebuilt from scratch.) That’s not Barra: her persona is somewhere between soccer mom and smooth-spoken corporate intellectual. Yet she seems to have unconditional support from traditionalists like Reuss, perhaps in part because she’s so team-oriented. When I ask about new car models she’s greenlighted, Barra quickly gives Reuss credit for much of the new technology and systems integration in the soon-to-appear Cadillac and Buick models, which feature things like active safety systems and a 4G LTE OnStar link that makes your car a traveling wi-fi hot spot. Despite an American business culture that has put the focus on celebrity CEOs, research shows that successful corporations are built on successful teams; Barra’s focus on the group is strategically smart.

The next 12 months are vital for GM and Barra, because the company will release a series of Marymobiles–vehicles created under her watch when she ran product development–that are urgently needed to revamp the product line. First out are midsize, four-cylinder pickups: Chevy’s Colorado and GMC’s matching Canyon. Pickups are a critical market for GM because of the profit margins and the stiff competition from Ford and Ram. The next generation of Cruze, GM’s top-selling car, will debut on a new global underbody it will share with other GM models. And then there’s the high-tech Caddy from the newly independent Cadillac division. But in the core of the car market, Barra faces another challenge: Chevy’s dull Impala and Malibu sedans won’t be redone for another year.

While Barra may not be a traditional car guy, she’s also no bean counter. This is a woman who, when growing up in a working-class family in Waterford, Mich., dreamed of becoming an engineer. She was one of only a few women to study electrical engineering at General Motors Institute, now called Kettering University. Barra tells me that as a girl, when her curling iron would break, she would go with her father–a veteran of Pontiac Plant No. 14–into his basement workshop and take it apart. “We might not get it back together, but we’d try to understand how it worked.”

Barra still seems most comfortable on a shop floor. On this August morning, she’s arrived at 8:50 sharp for a tour of the Davison Road Processing Center plant, which is in charge of assembling and packing the new ignition switches into boxes. She’s traded the Manolos for a pair of sensible pumps and a yellow safety vest with her name on the back. She moves quickly from point to point in the factory, receiving briefings from managers, line leaders, union reps and workers, one of whom is wearing a T-shirt with World War II’s Rosie the Riveter and her We can do it! slogan.

The tour leader explains to Barra that if she hears the phrase “Mrs. Johnson,” it is plant lingo for the average customer. “I love that you are talking about ‘Mrs. Johnson’–that’s a great example of how we care about the customer,” says Barra, interspersing her examination with compliments (“I know you’ve been working weekends and evenings”) and questions (“How much longer would it take to package all this if we switched to a different-size box?”) and even putting together a few switches herself (she drops parts at first but quickly recalibrates, adjusting her hand movements and position until she can keep up with the line).

At one point Barra stops abruptly alongside a line worker using a small magnetic tool to pick up tiny parts and move them into place more precisely. “That’s so interesting. I’ve never seen that tool before,” says Barra. The worker, a middle-aged African-American woman, tells her that she picked it up at a dollar store. “What a clever idea. That’s so creative,” says Barra. “What a great way to problem-solve.”

Later, in a meeting with higher-level staff, Barra tells the story about the dollar-store tool. Terry Hoover, an industrial engineer in operations at the Davison Road plant who’s sitting near me in the meeting, says he’s been with the company for 35 years and has never heard of a GM CEO doing this kind of “in the weeds” plant visit–which even if true is a revealing glimpse into attitudes about management. “I was really impressed with how she’s handled the whole crisis, the Senate testimony in particular. I think she handled it a lot better than previous leaders would have. There would have been defensiveness and denial–a ‘We didn’t do it’ kind of attitude. But you can’t do that with this, and she didn’t.”

When I repeat the comment to Barra, she winces slightly. It’s clear that it pains her to hear criticism of anyone who’s been on “the team.” She certainly won’t cop to details of any heated internal debate over how to handle the crisis, something that would seem inevitable at a company with as many stakeholders as GM. “We never considered being anything but factual and transparent.” Did that mean she never got pressure from anyone, inside or outside the company, to do things differently?

This is the one portion of the interview in which Barra averts her eyes slightly. “There were different views put on the table,” she says, adding later that some of the people who put those views out there are no longer at the table. “We had people with different experiences, but I think the small team that we had [meaning the initial war-room team] had a lot of respect for each other. We very quickly started saying, ‘What’s the right thing to do for the customer?'”

At the top of Barra’s list has been acting on the myriad recommendations from the Valukas report. She says her team has already implemented about 90% of them, including restructuring operations to prioritize safety and creating a more open environment for employees to raise a hand when there are problems. As head of product development and manufacturing, Barra had already done quite a lot of streamlining of the firm’s plants. Now she’s trying to shift the entire organizational structure: to stop viewing a car as simply a collection of 30,000 parts, more or less well engineered and individually designed. Instead, she says, it is a system that has to integrate increasing amounts of complexity. Think vehicle-to-vehicle communications, wireless capabilities and self-driving cars.

All this was the focus of Barra’s speech on Sept. 7 at the annual Intelligent Transport Society conference, where she announced GM’s goal to bring a practically self-driving Cadillac off the line by 2016. Customers from L.A. to Beijing want automakers to “mitigate, if not eliminate, the congestion, pollution and traffic accidents that are the downside of automobiles,” which self-driving cars could help do.

As unlikely as it may now seem, Barra hopes that safety will actually become GM’s competitive advantage. “We used to have an organizational structure built around parts–the body, the interior, the electrical structure,” says Barra. Unfortunately, she adds, that created a situation in which people “were expert in this or that without recognizing people don’t buy this or that–they buy a car, and we’ve got to pull it together, and people have to talk.”

The Valukas report provided an impetus to speed up Barra’s push for a more systems-focused way of thinking at GM, something already under way before the crisis, but one with safety at the center. Now a dozen systems czars in areas like materials, digital security and product integrity work in a kind of spoke-and-hub style, with Jeff Boyer, the newly appointed vice president of global safety, in the middle of it all. The hope is that developing products this way will help catch issues like the ignition-switch problem in the future–and make safety a hallmark selling feature of GM’s cars.

Barra has put the big brains in the company on implementing the Valukas recommendations. One of GM’s best engineers, Kevin Wong, has been tasked with doing a root-to-branch evaluation of the systems structure. But she’s also seeking ideas from outside, with Reuss leading a team that is talking to leaders in the aerospace industry, the Navy and NASA about how to manage organizational complexity and avoid catastrophic failures.

Other CEOs and global leaders have reached out with unsolicited advice or just a pat on the back and a comforting “Hang in there.” One is JPMorgan CEO Jamie Dimon. Barra says she appreciates how well he defended his people in the aftermath of the 2008 crash and that he was so “transparent” when communicating through a crisis. On her bedside table is Condoleezza Rice’s memoir No Higher Honor. “I find it fascinating because she shares so much about exactly what she was thinking” during various geopolitical crises, Barra says.

Plenty of people will be interested to know exactly what Mary Barra is thinking as she navigates an American corporate icon through the product-safety crisis of the decade. Will her tenure as the first female CEO of a U.S. auto major be dogged by the results of the Justice Department investigation? Or will she become a Harvard Business School case study in how to manage corporate crises in the 21st century? Barra’s hopes for her legacy are less complicated: “I just want to be part of the team that helped make GM the company I know it can be.”

Contact us at editors@time.com.

This appears in the October 06, 2014 issue of TIME.

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