By on August 19, 2010

Editor’s Note: Part One of Michael Karesh’s review of Sixty To Zero can be found here.

Journalists write stories. A coherent story is a partial truth at best. If it’s portrayed as the whole story, it’s a lie.

In Sixty to Zero, veteran auto industry journalist Alex Taylor III provides an unusual level of insight into the relationships between top auto industry journalists and the executives they cover. He acknowledges getting too close to these executives more than once, and blames this for several embarrassingly off-base articles. But even in his most self-reflective moments, Taylor fails to recognize an even larger source of distortion.

Taylor’s explanation for the collapse of GM is simple: the company’s senior executives were removed from reality, wedded to the past, and unwilling to act quickly and decisively to fix their firms’ mounting problems. Ford’s Mulally, according to Taylor, indicates the path Wagoner should have taken at GM. Though true to a point, this explanation doesn’t nearly go far enough. It’s not only simple, it’s too simple.

In Taylor’s view, “the history of nearly every auto company revolves around the CEO.” He has sought and received far less contact with people lower in the auto company organizations—even Bob Lutz, since he was merely a vice chairman, is a “lesser executive” who normally would not have received frequent press attention.

Why such a strong focus on the CEO? For starters, Taylor is clearly moved by status and prestige, the qualities embodied by the CEO position. Taylor’s approach to journalism is also strongly influenced by the desire to tell a good story and sell magazines. Individuals are easier to understand and more enjoyable to write and read about than teams or organizations. Just as Taylor was most interested in talking to CEOs, readers tend to be most interested in reading about CEOs.

Taylor does note in passing that the role of the CEO has been exaggerated: “When a company is performing well, there is an understandable impulse to attribute the success to the CEO and to examine his actions in light of that.” He also notes that “projecting the capabilities of the CEO onto an entire management is especially problematic for a company as large and complex as GM.” Despite these realizations, however, Taylor continued to do both.

Most of all, Taylor never seems to fully grasp that CEOs—even the good ones—have a severely limited and distorted view of what goes on inside their companies. The ideal access he describes, to shadow the CEO as he goes about his daily work, is a step in the right direction. With such access, he might see what a CEO actually says and does, and not have to rely on what the CEO claims, in interviews, to be saying and doing. But even if the CEO does and says what he would normally do and say while being shadowed, this assumes that all of the important activities inside these companies involve the CEO, or at least occur with the CEO in the room.

I must admit to an unfair advantage. Back in the late 1990s I spent 18 months practically living inside various parts of General Motors while conducting field research for my Ph.D. thesis. I attended over 400 working-level meetings within program management, design, marketing, and engineering, and spent entire days as a fly on the wall inside the Design Center. I rarely saw a senior executive. I never saw the CEO.

In one instance, Taylor shadowed Wagoner during a meeting with design executives. But did the real design work happen with Wagoner in the room? Should it have? During the days I spent inside GM, real work only happened when executives were not in the room. When the executives arrived, the real work stopped and the “dog and pony show” began. Beyond this, it quickly became apparent that within GM, and I later learned within just about any organization of any size, scant information makes it up even two levels, much less all the way from the product development teams to the CEO. Whatever information does make it has been heavily massaged. By continuously relying on CEOs as his predominant source of information, Taylor has been fated to keep repeating the same mistakes.

Compounding the problem, Taylor and his colleagues influence the industry that they cover. Executives want to have positive articles written about them, and so further exaggerate how much they can personally know and do. No one gets positive press by acknowledging their limits. After one debacle, GM’s Jack Smith continued to assert that he was well-informed about what was going throughout the organization, as if this were really possible, and tht he was not “out of the loop.” Wagoner convinced Taylor that “he was no forty-thousand-foot manager; he was intimately involved in key areas of the business” and comfortably interacting with everyone from engineers to dealers. Taylor never appears to have tested such claims by actually talking with people lower in the organization.

This exaggeration of the CEO’s role and the CEO’s abilities has been repeatedly validated by the resulting magazine articles. Cults of the CEO have been born and sustained. Encouraged by the press, auto companies concentrate decision-making (or a lack thereof) at the top of the organization even more than they might otherwise.

What both the journalists and most CEOs miss: the best senior executives develop teams of experts much lower in the organization, enable these teams to do their jobs well, then let them do their jobs. Mulally has made some tough decisions at Ford, but he has also focused on eliminating infighting and building teamwork within the organization. Mulally isn’t a car guy, and he knows he’s not a car guy. If he’s as smart as he’s reputed to be, he lets the car guys lower in the organization do their jobs without even pretending to be intimately involved in what they do.

Unfortunately, this isn’t the story one is likely to hear while interviewing a senior executive. Even if the executive does talk about “the organization,” such an account cannot compete with the portrayal of an individual executive for color and doesn’t make for a dramatic article the way killing a brand, publicly taking on the UAW, or a “ritual firing” does. Taylor repeatedly wishes for more “ritual firings”—his term, not mine.

The unrecognized problem with ritual firings: at best they assume that the individual fired was responsible for the mistake, and that other individuals would not have made the same mistake. At worst, they realize this, but don’t care. It’s just fun to watch heads roll. Taylor notes that executive firings were historically much more common at Ford, and that Mulally’s suppression of political infighting improved the company’s performance. Strangely, Taylor does not seem to learn from this that ritual firings don’t improve company performance.

Taylor also calls for auto company CEOs to take more risks, but this seems more than a little cliché. What sort of risks would he have them take? Jack Smith and Rick Wagoner get little credit for GM’s big bet on China. Don Peterson gets labeled an odd “iconoclast” for taking Ford in unusual directions. Roger Smith took many risks while CEO of GM, and gets severely criticized for each of them. Lutz receives mild praise for having some minor successes while avoiding disasters. Taylor wants risks without failures. But the real possibility of failure is what makes a risk a risk.

Taylor’s suggestions that executives should both take more risks and fire more people for mistakes comprise a recipe for firing lots of people. The “ritual firings” he wishes for would discourage the risk-taking he also wishes for. These are contradictory recommendations.

In reality, while there are some bad executives, all too often there are good executives placed within social systems that make it virtually impossible to make good decisions. Unless senior executives fix the underlying problem, which is the organization, not the individuals within it, they’ll just keep firing executive after executive.

Auto industry journalists like Taylor, by celebrating CEOs and largely ignoring the rest of the large organizations they lead, and by repeatedly focusing on the symptoms rather than the underlying problem, have themselves been part of the problem.

By focusing so intently on CEOs, and relying on interviews with them as his primary sources of information, Taylor has, without ever realizing it, spent decades building overly close relationships with the wrong people. Assuming, of course, that the goal was to accurately report what was going on inside these companies, and not making friends with important people in the process of selling more magazines.

I’d like to learn what’s really going on inside these companies, and how and how well they’re actually operating. Such a story makes it into the automotive press perhaps once every five to ten years. We have had insiders share bits of their knowledge, insights, and perspective here at TTAC from time to time. But true investigative journalism, where a writer builds relationships with people throughout these large organizations, and is able to report what’s really going on as a result? There are a number of reasons this still hasn’t happened—among them the very real possibility of “witch hunts” like the one Taylor describes—but I’m still hoping.

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25 Comments on “Book Review: Sixty To Zero [Part II]...”


  • avatar

    Michael,

    One reason why Taylor may have focused on CEOs is that he was writing for a business publication, not an automotive one.

    • 0 avatar

      Wouldn’t a business publication be just as interested in what’s actually going on inside a company, and not just whatever account the CEO is willing and able to provide?

    • 0 avatar

      In an ideal world, yes.

      I think my comment was more along the lines of how business publications generally focus on the business side of a firm, not the product side. In general, though, Forbes, Fortune, Barrons et al usually focus on upper management, not the troops in the trenches.

      I will say that the American car companies are pretty good at making engineers and designers available for interview at the car show previews. Most of the reporters gravitate to the “star” executives, but GM, Ford & Chrysler always have r&d folks at the shows.

      We’re all human. I think most people would gravitate to someone famous and powerful. As you pointed out, that attraction applies to readers as well.

      The B&B may like the inside scoop from Ken Elias, but they also loves them some Lutzian quotes as well.

    • 0 avatar

      Better than just interviewing CEOs. But interviews as a sole method have major weaknesses.

      I also conducted interviews, but only after observing the people I interviewed at work over an extended period of time. So I knew what questions to ask, and how to evaluate the answers.

      When I was inside GM I was often shocked by how little press stories about the company resembled what was actually going on inside the company. So I don’t pretend to know what’s going on inside any of these companies now, since the press is my only source.

  • avatar
    Daanii2

    You ought to post your review of this book on Amazon.com.

    • 0 avatar

      The last time I posted a review on Amazon I ended up with an outraged message on my answering machine from the esteemed author.

      I was ignorant at the time, and unaware that lifting a few pages straight out of a manufacturer’s press materials did not warrant the term “plagiarism.” If the owner wants you to take it, it’s not stealing when you do, right?

      I deleted that review and one other from Amazon a while ago.

    • 0 avatar
      Daanii2

      Amazon is a jungle. Attacks are common. Many reviewers, like you, get tired of that and give up.

      Even so, posting reviews like this on Amazon helps people who may not see it here. No need to use your real name if the attacks get to you. You could still put in a plug for TTAC.

  • avatar

    Also, Michael, you did an outstanding job illuminating how things work in a big corporation like GM, however I’m not sure that how it is at all big companies.

    When I was at DuPont, because our SBU was the only company unit not headquartered in Wilmingont, DE, the highest ranking person on our site was actually a senior VP of the company. I was the main IT technical resource on our site, which meant that if one of the suits had a ‘puter problem, I was usually assigned to fix it, so I got to know most of the executives on site including the VP. From what I could tell, most of the suits were pretty well informed on R&D developments. Now that might have been a unique situation. The R&D lab was right on site. Also, DuPont is a company run by engineers. Almost all executives of the company have some kind of science or engineering degree in addition to their MBAs. Though I doubt the CEO knew what was going on in the lab in terms of product development, I’m pretty sure the head of our business unit had a working knowledge of what chemistries were being developed.

    • 0 avatar

      He still wasn’t the CEO of DuPont, right?

      Also, I’m thinking of knowing not just what is being developed–the CEO would know this in a car company–but who’s actually doing the work, how well the product is coming along, and how good the product actually is as a result.

      My wife has worked in some very small companies. And even in these the boss’ boss often has a limited and distorted view of these things. It’s one reason why people who sound good get promoted much more often than those who are merely talented.

      Chemicals might also be less complicated than cars, so information on them might be easier to communicate and comprehend through fairly brief communications.

    • 0 avatar
      Truckducken

      Ronnie, I’m not sure we should cite a company that has dropped from a perennial Top 10 amongst the Fortune 500 for much of the 20th century to #86 in the latest rankings as a paragon of managerial involvement and competence. They make Detroit look successful by many measures. I did occasionally see competent managers during my tenure amidst the engineers. They didn’t last long. Glad you had the rare good experience.

      In any case, the phenomenon Michael cites is pretty darned universal. It takes an exceptional leader to be able to peel back the BS and understand what is really happening in any company, and for those who can, there remains the challenge of knowing what to do to lead the competition. Most humans – including every GM CEO I can remember – take the easy way out and just play their role.

  • avatar
    gslippy

    Excellent review with good counterpoints.

    “Beyond this, it quickly became apparent that within GM, and I later learned within just about any organization of any size, scant information makes it up even two levels, much less all the way from the product development teams to the CEO.”

    This is completely true. Humans cannot assimilate 3 organizational levels of information, and, if a manager did, they’d be accused of micromanaging. The best managers recognize their limitations and let the experts do their work, as you describe with Alan Mulally.

    But they also set meaningful, trustworthy, quasi-steady-state goals for the experts to pursue. Goals should change slowly, not daily or even annually. For example, shifting from a technology-leading company to cost-cutting to “quality” happens with regularity, and all of them are noble goals. But re-huddling the team each time the goals change causes the organization to lose focus and ultimately, market share. GM isn’t the only company to suffer from this.

  • avatar
    86er

    Taylor is clearly moved by status and prestige…

    That’s Alex Taylor the Third to you, Michael.

  • avatar
    Lokki

    What’s the old joke?

    The workers looked at the product being made and said
    “This is S#17!”
    The floor manager said, “It’s manure”
    The section manager, said, “It’s fertilizer”
    The department manager said, “It makes things grow”
    The division manager said, “It’s good for the garden”
    The vice-president told the CEO, “It’s great!”

  • avatar
    Ron

    Michael is 100% right — Alex Taylor over-overemphasizes the role of the CEO.

    Yes, decades of bad management took its toll on GM. However, how many good managers would want to live in Detroit and work in an uncompetitive industry? Warren Buffet once said that when a good manager meets a bad business, it is the reputation of the business that remains intact. Until the recent restructuring, the U.S. was the most expensive place in the world to build cars, and its disadvantage only grew as pension and retiree health care costs had to be spread over fewer and fewer sales. While Detroit’s costs are now similar to the Japanese, the Japanese have lost their lead to the Koreans, who are looking over their shoulder at the Chinese.

  • avatar
    Paul Niedermeyer

    Michael,  Thanks for this excellent review. I read Taylor’s interview of Alan Mulally in Fortune, and was shocked at how much energy and time Mulally had invested in the preliminaries to their meeting. It confirmed to me that folks like Taylor are some of the most critical components in these CEO’s PR machines.
    BTW, this comment of yours in Part I really hits the nail on the head:
    There is no single human nature. The Myers-Brigs Type Indicator (MBTI) is interesting in that, among other things, it distinguishes between people who act based on their feelings and those who act based on reasoning. The problem is, people who act based on reasoning are unlikely to develop the connections necessary to get inside information.

    Its exactly why I left the corporate world, when I realized my skill set leaned way too much into the reasoning side and not nearly enough into the people skill (emotional) side. And it so explains why I so rarely relate to/trust CEOs. (Ford’s Don Petersen of the eighties being the one exception).

  • avatar
    Travis

    I’d also like to echo Paul’s praise for this review. I normally find your reviews about cars to be nearly unreadable. The way you express your opinions is coma-inducing. This however was fantastic, incredibly interesting, and it seems like you genuinely cared about what you had to say. Therefore, I also cared about what you had to say!

    • 0 avatar
      Alexdi

      Faint praise, this. “Usually you’re terrible, but today I didn’t vomit!” How generous.
      Michael, the car reviews and this series are excellent. Don’t change a thing.

  • avatar
    Telegraph Road

    Excellent review Michael.

    I think Petersen’s tenure at Ford ended because he failed to understand the importance of whose name was on the building and letterhead. The Ford family proved to be correct, however–Jaguar was a lousy acquisition for the company.

  • avatar
    greenb1ood

    This is a very good analysis of organizational behavior at work. Very good review and insights Michael. I would really enjoy reading your thesis developed during many, many meetings at the General – it also leads me to believe that there’s a very good book just waiting to be written.

    Before I moved down the supply chain, I had one opportunity to present directly to the President of one of our esteemed domestics and two things struck me:

    1) I have NEVER had so many people up the chain involved in EXACTLY what I was going to say and how I was going to say it. There were at least 10 pre-meetings to discuss a simple 3 minute presentation on our work and strategy.

    2) I was stunned at this man’s inability to catch direct contradictory information. One of the other groups made at least 3 contradictions in the information they provided and they all went right over his expensive hair cut. Even more interesting was that I could see other managers with him (who were very, very smart IMHO) hold their tongues and wince every time on of these contradictions was hurled. That told me this particular executive did not like being shown up.

    Michael is absolutely correct in his assessment that most of the time, the real success in a corporation lies in the ability of a select few very intelligent and creative individuals at the middle and lower levels finding ways to appease the management chain and get their ideas implemented. The best thing a manager or CEO can do is identify who these people are within their organization and get the eff out of their way.

    • 0 avatar

      The executive summary of the report I turned into GM can be found here:

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

      Not sure if or when I’ll find the energy to turn the whole thing into a viable book. Sometimes I think about simply posting it as is.

    • 0 avatar
      alfabert

      If I’d been able to read Michael’s review first, I would have spared myself reading AT III’s book. A dead-on review.

      If Michael were to post his thesis now, as is, it might spare some part of Detroit of having to (painfully) rewrite the book. And it would be a vastly better read than Sixty To Zero, for all the rest of us.

  • avatar
    50merc

    When I was an internal auditor I told the CEOs to whom I reported that Internal Audit was unlike all other units IA seeks to find and report on mistakes, chicanery, waste and underperformance. Everybody else, at each organizational level, has an interest in suppressing unflattering information and keeping it from going up to the next higher level.

    What I’d like to read about are automotive failures, such as the Aztek pictured on the cover of Taylor’s book. I want to know the who, what and why of such calamities. My guess is flops like the Reatta, Fiero, Merkur and last generation T-Bird gobbled the profits from millions of high-volume cars. Were any lessons learned? Did anyone pay the price?

  • avatar
    nrd515

    The disconnect between the upper management and everyone else in these companies is amazing. I worked at a large company for several years, one that made building materials.

    Anyone who made it to the “top floor” who dared to tell the board what was really going on would be dooming themselves. It happened a couple of times where someone would just say what was going to happen, and it always did happen, exactly as they claimed it would. The next thing you know, out the door they went. The heir apparent to the throne got booted when he said that the company should just accept the obvious, that bankruptcy was unavoidable, and they should file it right now, while the economy was doing well. Less than a month later, he was sent on his way, several million richer, and was soon hired by a competing company, once his “no compete” clause ran out.

    The CEO of the company basically did two things, he made speeches at various places around the country (and sometimes out of the country) to local business associations, and play golf. This was basically a pretense to do what he really went there to do, play golf, and lots of it. Golf, all the time, golf. He hired a “hit man” to do all the firings, as he was a “nice guy”, who didn’t like to do any actual firing himself. The arrogance of the upper management was amazing. They laid off about 100 people, then most of the upper management spent nearly 100K each on two occasions for golf trips down South, and then out West. They were so out of touch with reality that they were shocked when there was practically a revolt over these trips. Almost everyone in the building got a detailed printout of the expenses for these trips, along with the costs of the CEO’s golf trips (Almost all by corporate jet) for the last two years, and it got ugly. The printout was titled, “How many jobs could have been saved in the last year?”. The person who put out all those printouts was never found, even though the crack(ed) security team tried and tried. The security manager was canned soon after he failed to find out who did it. Nobody was shocked when this happened, except him, he looked like he’d been told he had a terminal illness when he got escorted out the door one morning. The amount of money wasted by the executives on “urgent meetings” overseas, while taking their wives and kids, on the company’s expense, and the general waste of money throwing perfectly good office supplies and other items away was almost comical. They also bought office supplies and computer equipment from a traditional office supply company for almost full list price, without any thought of it. I made a proposal to take over purchasing of most supplies and PCs in the US. I estimated I would save about a quarter million a year, counting my salary, in the Ohio area alone per year. I was basically laughed at, even though there was no way to dispute my numbers, as I had the prices paid, and the prices I would have paid, right there to see. I knew I had wounded myself career wise, and soon left.

    The CEO got grilled over his and his “team’s” “throwing money” away playing golf while laying off people by several people at the stockholder’s meeting, and it was amusing to watch the video of it and see him squirm, and try to spin it. He also made several attempts to convince hostile employees that all his trips were primarily business related. I don’t think anyone bought it, and it was very entertaining to watch him crack jokes to an audience who was way too quiet. The flop sweat was amazing. All of this was happening while the company was struggling to stay out of bankruptcy. It didn’t make it, but is doing ok now, over a decade later. The CEO retired a few years later, and got a nice payout when he went off to golf to his heart’s content, less corporate jet, and all expenses paid. Most of the “golf team” is still there, one of them is now the big cheese himself, but golf outings are done a different way now, there’s no printouts to come back and haunt them now, the trips are paid for a different way, so to avoid such “unpleasantness” in the future.

  • avatar
    werewolf34

    CEOs (good ones anyway) are constantly trying to break the VP layer of misinformation. One way is to hire mgmt consultants (roll eyes here). Another is to force out people and hire your cronies (more common)

    Good companies work in spite of people in mgmt


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