By on June 14, 2010

Doubtless somewhat shocked and surprised about GM Chairman/CEO/Non-Car-Guy Ed Whitacre’s decision to take over product planning responsibilities, Automotive News [sub] did some digging into the decision, and offers a full report. According to AN’s GM sources, the decision comes down to one fundamental goal: holding lower-tier executives accountable for decision making. By reducing executive reviews of forthcoming vehicles by one third, or about four times per development cycle, lower-level executives and engineers will have more freedom to make decisions, and will spend more time developing and less time preparing data for executive reviews. And lest you think this decision doesn’t merit your attention, consider this: though GM’s bureaucracy had created incredibly long lead times, most automakers hold about ten executive reviews per new product. By cutting to four, GM is taking something of a step into the unknown.

They’re trusting the troops below to do the right thing and check in less often

So says former mid- and full-size sedan (currently compact car) supremo Jim Federico, who is clearly a poster boy for this reform. Having spent years in Opel’s headquarters developing the Epsilon II chassis and its various applications, Federico has the kind of hands-on development experience that the new reform seeks to leverage. But, as examples from the Chrysler Airflow to the VW Phaeton prove, simply giving engineers free reign doesn’t always yield vehicles that sell well. And with executives in charge of GM’s business plan checking in on new vehicles less often, how are the newly-empowered engineers and development leads supposed to check their work against the market?

The answer, in a nutshell: Market Research. Having binged on market research-driven development during the Zarella era, GM had moved away from relying on focus groups and survey results under the leadership of Bob Lutz. Lutz was notoriously dismissive of market research, for the simple reason that Lutz knew a good car when he saw one. And if you’re never wrong, who needs to listen to the consumers? Besides, the Lutz school of thought was that a designer’s instincts produced better cars than all the market research in the world. As AN [sub] details, all that is changing now that Lutz is gone.

The now-retired vice chairman brought product planning, which includes market research, under the purview of product development.

In contrast, Whitacre has added new-product planning head Steve Carlisle to his list of direct reports, which raises questions about the role of research in product decisions.

In short, Whitacre trusts GM’s engineers to execute new products more than he trusts GM’s designers to dream up the cars that the market doesn’t know it wants yet. Whitacre will arm himself with a steady flow of market research and guide planning from a distance, instead of getting personally involved in the technical aspects of development the way Lutz would. The major worry here: GM’s cars were undeniably improved by Lutz’s hands-on approach, which was itself a reaction to the intensely mediocre products created by Zarella’s market research-driven development process. With a non-car guy calling the planning shots based on the latest focus group numbers, GM runs the risk of devolving into Malibu Maxx-era dissipation. On the other hand, engineers like Federico have experienced the successes (and failures) of the Lutz Way, and are, in theory, acting like hundreds of mini-Lutzes, obsessing over the details and execution of every new product.

Lutz’s influence on GM’s recent products helped set the stage for a reborn General Motors, but one generation of vehicles can’t undo decades of decline. GM’s new product development approach will have to build relentlessly on recent improvements if it wants its consumer reputation to eventually match the quality of its products.

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20 Comments on “GM’s Post-Lutz Planning Reshuffle: Fewer Reviews, More Market Research...”


  • avatar

    Ed,

    Your take of how GM operated under Zarrella and Lutz is based on press accounts, which bear a loose relationship, at best, with how the company actually operated during each era.

    Market research drove product decisions far less before Lutz than press accounts would have you believe–I was inside GM in the late 1990s–and have probably had a larger role under Lutz than press accounts would have you believe.

    For decades the auto industry has liked to blame market research for poor products and credit the gut of this or that executive for good products. Both have little basis in reality.

    In general, it’s best to assume that the press doesn’t have a clue about what really goes on inside these companies.

    The real deal:

    Mediocre products result when the organization simply isn’t functioning well, in part because the various functions aren’t working together well. Market research is often a scapegoat for such organizational dysfunction. It’s a way executives avoid accountability when they simply cannot get the organization to work together to develop a good product.

    An executive like Lutz can have a positive impact compared to the above organization, but this does not address the root problem. It’s like saying that a dictatorship is superior to a corrupt bureacracy. Better, yes, but far from ideal.

    No executive is so smart that he can make better product decisions based on his gut than a team of people who’ve been living a particular product for the past year or more.

    Skilled, knowledgeable people will make better decisions if they use market research not to make decisions for them but to inform their judgment.

    I don’t know how Lutz used market research at GM. When he was at Chrysler he was supportive of market research when properly used, and the company’s biggest successes during the 1990s, the minivans and the Grand Cherokee, drew extensively on market research.

    If Whitacre’s changes put skilled teams in place and then let them do their jobs, with market research as one essential input, better products will result.

    The executive summary of the report I submitted to GM back in 2001:

    http://www.truedelta.com/execsum.php

  • avatar
    1996MEdition

    Does this mean we are going to get more cupholders again?

  • avatar
    John Horner

    Don’t blame the engineers for the Phaeton fiasco. The product itself is a decent effort. The problem was with the decision to build such a thing under the VW name in the first place, which decision came from the very top of the corporate ladder.

    Executives run amok do a horrific amount of damage.

    “Lutz was notoriously dismissive of market research, for the simple reason that Lutz knew a good car when he saw one.”

    Lutz gave GM the GTO and the G8, both personal pet projects which were complete failures. Lutz loved all things Hummer back in the day and oversaw the effort to bring not one, but THREE different failed hybrid technologies to market in GM vehicles. Lutz’ infamous gut was wrong at least as often as it was right. Long live the Merkur.

    • 0 avatar
      Dr Strangelove

      +1

      the Phaeton was inflicted on VW and the world by Piech, the “car executive of the century”.

      Might be fun to put together a list of the worst car executives ever. I nominate Schrempp for the top spot.

    • 0 avatar
      Steven02

      John,
      Lutz also gave some really good cars. The GTO, IMHO, should have been named something else. It didn’t look like a GTO. The G8, was released during a time that wasn’t kind to large cars. It wasn’t geared towards fuel economy. The interior also needed to be better, much like the Aussie versions of the car which sell well, in both Monaro and Commodore form.

  • avatar
    jpcavanaugh

    This is a very interesting issue. The passionate car-guy vs. the market researchers.
    Let us not forget that the Edsel was the product of some of the most thorough market research ever done up to that time. Before that, the Chrysler products of the 1949-54 era were also at least partly due to market research – everyone said they wanted cars that were smaller outside, bigger inside, that were more sensible than stylish. These cars, though of top quality, were the cause of Chrysler being passed by Ford as #2 of the big 3 for the first time in 25 years. I am racking my brain to think of any breakout automotive hits that have been the product of market research. Anyone?
    I think it is good news that GM will see less upper management meddling. Pushing some accountability to lower levels of management has been something missing at GM for eons. This is one of the less-appreciated things that Iacocca did for Chrysler, which bore a lot of fruit in the 90s.

    • 0 avatar
      John Horner

      “I am racking my brain to think of any breakout automotive hits that have been the product of market research. Anyone?”

      Camry. Accord. Sienna. Odyssey. Sonata. Lexus. …..

    • 0 avatar

      Have you personally read the market research conducted for the Edsel? I have. You can find much of it in the MSU library. It had zero impact on the Edsel’s styling, and this styling was probably the major reason the car failed.

      As I said in my first comment, the auto industry loves to blame market research for decisions that it had very little or no influence on. Worse, everyone keeps repeating the same myths as if they were fact.

      Market research certainly has some limitations, and can be poorly conducted. But you could as well say that cars should not be made because some people drive them badly, and people have died as a result.

    • 0 avatar
      cdotson

      Wasn’t the 1965 Ford Mustang the child of prodigious market research? Don’t recall where, but I recall reading this quite some time ago.

    • 0 avatar

      @cdotson – If memory serves, Iacocca mentions in his autobiography how adverse he was to making the Mustang a four-seater, as it wrecked the original (two-seat) proportions… but market research won the day.

      Had the Mustang arrived to market with two seats, I doubt the nameplate would still be around today…

    • 0 avatar
      jpcavanaugh

      @ Have you personally read the market research conducted for the Edsel? I have. You can find much of it in the MSU library. It had zero impact on the Edsel’s styling, and this styling was probably the major reason the car failed.

      Michael, no I have not seen the actual research. However, I would argue that the bulk of the reason for the Edsel’s failure was the fact that the market research was done in and around 1955 when mid and upper mid price cars were booming (Buick was the #3 seller), and the car’s debut was in 1958 when the mid price segments collapsed (Rambler beat Plymouth as the #3 seller). I have also looked at pricing – by 1959, Ford moved up into Edsel’s territory, and Mercury moved down, moves that eliminated Edsel’s reason for being. I have read the Robert McNamara did all that he could to kill Edsel once he became head of the company. I will agree that the front end of the debut Edsel was unfortunate.

      I do not dispute that market research done well has a place in product planning. But the 3 big trend setters of the 80s and 90s (early 80s Jeep Cherokee, the Chrysler minivan and the Suburban) seem from my armchair vantage point to have taken off more by accident then by market research. Sometimes the right car at the right time is more accidental than not.

      cdotson- I think that the Mustang was the result of very effective market research – kind of. Ford did enough research to know that youthful and sporty were really starting to sell well in the early 60s, and that the baby boom demographic was going to be a huge market. I understood that the market research identified the concept, but that the car itself was a rare marriage of styling, engineering and cost accounting that turned a Falcon into the most desired car of a generation. I think Iacocca may be the best example in modern automotive history of using market research to spot early trends, and coupled it with a fairly unique sense of what would sell, and empowering those under him to do their jobs and turn out a desirable product.

    • 0 avatar
      geeber

      The first Mustang prototype – called Mustang I – was a small, mid-engine two seater. Iacocca liked it, but realized that the people who loved it enough to actually buy it were the hard-core car buffs. He correctly noted that this market was not large enough to support the volume necessary to get the car approved by Ford’s notoriously tight bean counters (especially in the wake of the Edsel fiasco). The Mustang I would not have shared much in the way of hardware or parts with other Ford vehicles, further driving up its cost.

      Iacocca had no hesitation about switching to the four-seat Mustang. He liked the Mustang I, but was not wedded to the idea of a Ford sports car, as opposed to a Ford sporty car. He did object slightly when Henry Ford II demanded that another inch of rear-seat legroom be added to the car, but, in the early 1960s, Iacocca still remembered whose name was on the building.

      As for the Edsel – its styling wasn’t that bad. It certainly was more attractive than the styling of the 1958 Buick and Oldsmobile. I can’t blame the styling for the failure of the car. The front end was distinctive, and better than the chrome-brick look of the 1958 Oldsmobile.

      The real problem was that Ford had built up so much hype about the car from late 1956 until its debut that people expected something really new and exciting – at least on the order of the 1957 Mopar line. When the Edsel debuted, it was just another medium-price car with some serious quality problems, poor marketing and an unfamiliar name. Add a serious recession that began in the summer of 1957, and a top corporate executive (McNamara) determined to kill it as soon as possible, and it’s no wonder that the Edsel failed.

      I believe that the reason that the Edsel gave market research a black eye was the perception that Ford spent a lot of money on this area, only to end up producing a car that, aside from its front-end styling, didn’t offer anything that one couldn’t get in a Pontiac, Oldsmobile, Buick, Dodge, DeSoto or Chrysler. Or, for that matter, a Mercury.

  • avatar

    As soon as the question is framed in terms of who should have power over whom, you’re already on the wrong track.

    Giving any function the power to have its own way, irrespective of what other functions say, is a bad way to go. They all have a role to play, and the best products result when they work together.

    • 0 avatar
      cdotson

      Agreed. Any one functional group or individual run amok is a recipe for potential disaster. Any organization (and especially large ones) possesses a tendency to sub-optimize at the functional-group level. The executive’s role is to balance the optimums of each group to build a net optimum for the whole organization – a precarious balancing act.

      That said, a well-defined set of customer requirements and a well-constructed profile of the customer group at the project outset allows good engineers to do the right thing for that customer. It’s a lot easier to please a defined specification than the gut of a new-product guru, or ten committees of various executives.

      Four reviews should be enough; approve the business case and customer requirements, approve the conceptual project, approve developed project according to customer reqs, and final product approval. Homework done properly at the outset should absolutely allow fewer downstream reviews and all but eliminate late-game changes.

  • avatar
    mtymsi

    Not quite sure how to read this, is it being said that design will play a subordinate role to engineering? Sounds like it to me and that would be a big mistake IMO. Although it was a different era GM’s biggest successes came from vehicles designed under Harley Earl and Bill Mitchell. Assuming quality and engineering are on par styling is what gets many buyers interested in a vehicle. There are exceptions like Toyota and Honda but they have large loyal established followings that GM products don’t. Ed Wellburn is IMO a very capable head of styling and the talents of his design staff need to play an integral role in future products. Styling should be the dept. designing future models with Engineering modifying them as necessary for production otherwise a repeat of the Malibu Maxx could result. I think a good current example of how important a role styling plays when attracting new market share is the Sonata.

  • avatar
    zerofoo

    I wouldn’t expect an engineer to design a successful car any more than I would expect a programmer to design a successful computer operating system.

    Designers dictate look and feel based on market research, it is the engineer’s responsibility to integrate those ideas into a working whole.

    “Car guys” much like “Linux guys” are terrible designers.

    -ted

  • avatar
    ClutchCarGo

    I still don’t understand why the Malibu Maxx is so unloved. While it’s not a great car, it is a pretty good one with a lot of practical functionality. My wife, sister-in-law and niece all drive them and are very happy with the styling, but they really like the versatility. I even see echoes of the Avanti in the profile view. I know that they didn’t sell well, but I thought that was more the result of Chevy not knowing how to market them, plus the fact that the sedan version was pretty lame.

    • 0 avatar
      geozinger

      @clutch: I’m with you on the lack of Maxx love. We leased one up until a year ago, if I had gotten a different lease, I would have kept it. it was a very practical car, especially with all of the unusual features, like the folding passenger seat, the rear seat on tracks and the lightweight hatchback.

      I really miss a hatchback in a mid sized chassis. I’ve had them before and find them to be the most comfortable all around cars to live with. I will probably look for a used example, unless fuel prices go through the roof again, then I will have to punt.

    • 0 avatar
      mtymsi

      The Malibu Maxx was a total flop in the marketplace. The car just flat out didn’t sell no matter how functional it was. IMO the styling had a lot to do with the poor sales. For cars in general styling has always outsold functionality by a wide margin.

  • avatar

    doesn’t matter who’s in charge, make it beautiful and it will sell.


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