Never assume that press accounts of what’s going on inside the auto companies resembles what’s actually going on. For my Ph.D. thesis, I inhabited General Motors’s product development organization much like an anthropologist might inhabit a Third World village. What I observed during my year-and-a-half on the inside bore virtually no resemblance to what I read in the automotive press. Journalists aren’t inside the companies, have contact with select high-level insiders, and tend to print the PR-approved accounts these insiders provide. These accounts reflect how senior executives want outsiders to think the organization operates and performs much more than how it actually does. To the extent journalists know the reality—and few do any digging—they rarely print it. So I’ve refrained from even guessing at what’s been going on inside GM. Instead, I’ve been hoping that some insider would write an insightful account of the eventful past 10 to 15 years. None have, until ex-vice chairman Bob Lutz’s new book, Car Guys vs. Bean Counters: the Battle for the Soul of American Business. Lutz has a reputation for speaking his mind and straight shooting. What does his book tell us about what really went on inside GM?
Not much. Lutz’s lips might be moving, but he ain’t talking.
Unlike former “car czar” Steven Rattner’s recent tell-all or the “Corvette book” that enraged GM design executives back in the mid-90s, Lutz avoids naming names. Former CEO Rick Wagoner is rarely mentioned, as if Lutz had little direct interaction with him, and always in respectful terms: “Rick was a kind, intelligent CEO of spectacular human qualities.” Consequently, the adversaries in Lutz’s battle against the “bean counters” are faceless and his accounts of what happened are few and lack illuminating detail. We’re treated to a few brief examples of pre-Lutz products that sold poorly, but no detailed accounts of how better new cars were developed under his watch. Clearly corporate norms of what’s permissible to divulge to outsiders had a much higher priority than providing readers with insight into what really went on. As Edward Niedermeyer noted in his review, Lutz ultimately blames outsiders for GM’s fall, and lets his fellow executives off the hook. His book could have been incredible. Instead, for this review I’ve had to work with scraps.
Dealing with “them”
Ron Zarrella, head of GM North America back in the late 1990s, once remarked that he couldn’t do what he knew needed to be done to improve the company and its products because “they” wouldn’t let him. The response of the person in the room who relayed this to me: “I thought you was ‘they.’” The lesson: even those at the top felt powerless to change things because of some faceless “they,” so what hope could those lower down have?
Lutz takes some cheap shots at Zarrella, who as someone long-departed apparently isn’t protected by the executive code, but acknowledges a key failing shared by many intelligent people inside GM: Zarrella gave up. Lutz vaguely describes his own power as limited, but he didn’t give up. Relying on persuasion more than the direct exercise of power and aided by Wagoner’s unflagging support, he was able to make a few significant changes to GM’s way of doing things.
Too many brains, too little focus on what really matters
Lutz repeatedly argues that GM had over-intellectualized and over-complicated the task of developing a new car. The design process began in a room full of disturbingly casual, hirsute, beanbag-ensconced designers charged with envisioning “big ideas” (they failed to come up with anything useful). Marketing and the ad agencies it employed contributed boards that vividly and distinctively characterized the brands and their intended customers (they failed, too). A product planning group full of big brains applied complex analyses to vast amounts of data to deduce segment-busting new products like the Envoy XUV (which then failed to sell). Engineers required that every car meet a vast number of criteria that had accumulated over the decades. In one especially pernicious instance of the “tyranny of process over results,” the Vehicle Line Executives (VLEs) in charge of programs were awarded bonuses based on how well they achieved a large number of subgoals such as piece cost, build combinations, and time-to-market. Lutz recounts how one (unnamed) VLE demanded a bonus because his “scorecard” was all “green,” even though the product had received bad reviews and didn’t sell well. Struck speechless at the time, Lutz observes that “the obstacle has been, as always, pursuing a subgoal that was easy to game instead of putting the real objective above all.”
Design uber alles!
The real objective? Creating cars that sell. For Lutz, there is a simple way to achieve this overarching goal: make the cars look beautiful and expensive. Everything else is secondary, at best.
At the simplest, most superficial level, Lutz repeatedly had to direct designers to add more chrome trim. (Imagine: a world where GM had to be pushed to add more chrome by an exec brought in from outside.) But, as GM learned way back in 1958, chrome can’t fix everything. Even an executive with the so-rare-it’s-practically-raw good taste of Bob Lutz can’t draw a beautiful car on his own. You must free the designers to do what they do best.
To free the designers Lutz:
–eliminated the beanbag room
–eliminated the brand character nonsense
–greatly reduced the role of product planning (a hotbed of over-intellectualization whose focus on numbers squeezed out spontaneous creativity)
–pushed engineers to re-examine each criterion, and consequently discard many that were outmoded or that, due to an overly narrow focus, hurt more than they helped
–handed product responsibility to the VLE, usually short on good taste, and (un)focused on too many other things, only after the design was done
Lutz added a handoff to the VLE after the design was complete. But within design he did the opposite, simplifying the design process by eliminating hand-offs from the advanced studios to the brand character studios to the production studios. The often disastrous consequences of these hand-offs in terms of both time-to-market and the appearance of the car came up often in my own research. Eliminating them should have been a no-brainer (and was among my recommendations), but GM was generally oblivious to how people work (or fail to work) together. In this case, and likely others, Lutz brought some much-needed common sense to GM’s top leadership.
We don’t need no education
Note the double negative. Wide, imprecise gaps between body panels endangered Lutz’s drive to make GM’s cars look more attractive and expensive. But this design problem couldn’t be fixed within his design bailiwick. Instead, the gaps were the result of “a generalized tolerance of sloppy [product] execution.” Lacking sufficient power to dictate a fix, Lutz kept bringing the issue up until the annoyed head of the metal fabrication group finally offered, “show me a car that has the fits you like, and we’ll do the same with ours.” Lutz showed this exec a 2002 Hyundai Sonata. The skilled engineers in metal fab then achieved the requested tight, precise gaps with shockingly little effort and expense. Apparently they’d never realized this was desired. Once educated by Lutz, they did much better. Enlightened and encouraged by this victory without losers, Lutz took his show on the road, educating the scattered tribes on how to recognize sloppiness and the need to eliminate it.
Working within the system
Lutz taught me about the danger of a cheap-looking interior. Indirectly, and through a negative example. Among his cars at Chrysler: the original Neon. I advised my sister to check it out. She summarily rejected the car because to her it looked so cheap inside. By the time he returned to GM, Lutz had also learned this lesson. Here as well he couldn’t dictate a fix. But he recognized (as did many of the people I spoke with for my thesis) that cheap interiors often happened because the interior is the last part of a car to get locked in. (There’s less lead time on interior components than on the body and the mechanical bits.) Consequently, any cost overruns over the course of the program had to be counteracted by downgrading the interior. Lutz couldn’t simply eliminate the bean counters’ cost controls. Instead, he intelligently worked within the system by removing interiors from the VLEs’ responsibilities and giving them a separate budget. This way cost overruns in the body, powertrain, or chassis couldn’t result in cheap interiors.
Half-truths without consequences
Lutz notes, without going into any specifics, that the VLEs and product planners didn’t like having their responsibilities reduced. But otherwise he ascribes no negative consequences to his empowerment of design and his war against “the tyranny of process.”
I observed the ridiculed processes inside GM, and can confirm they weren’t working. GM’s executives and managers devoted far too much time and effort to tactics and minutiae and far too little to strategy and the car as a whole. But the things the processes were supposed to do did need doing, and cannot be effectively done entirely by Lutz’s favored creative types. In his earlier book, Guts, Lutz writes eloquently of the need to combine “left-brained” and “right-brained” approaches. The new book does state that, under Lutz’s leadership, the “planning people” and the “idea people” developed mutual respect, where each recognized the value of the other’s work (while still not liking it). But, with no description of how these two groups actually worked together to create better cars, this comes across as the typical PR-approved “one big functional family” effluent. How well are the two approaches actually being combined?
For the beginnings of an answer we must look beyond the book’s unrevealing pages to the products Lutz oversaw. Many of the engineering criteria were unnecessary. But what about engineers’ legitimate priorities? Making the cars more comfortable, functional, or enjoyable to drive doesn’t really come up in the book. In fact, the opposite is the case: Lutz asserts that if a car looks good, buyers (essentially all of them, he’s anti-segmentation) will willingly sacrifice functionality. Creative, cross-functional, both-brained solutions that might make cars both look better and more functional? They don’t seem to have been explored. More broadly, it’s not clear that design and engineering work much better together now than they did earlier. Lutz might have simply shifted the shoe to the other foot. In his approach, there are a small number of top priorities (usually styling) and other things (like curb weight) are allowed to slide. This might explain why GM’s latest cars are hard to see out of, suffer from poor ergonomics, and hug the road with a few hundred extra pounds. While some buyers are won over by the cars’ styling, others are turned off by these shortcomings.
Lutz ad infinitum, by design
So, as vice-chairman in charge of new product development Lutz was able to get some desirable things done. The cars are more attractive inside and out, and drive more smoothly and quietly. But did he fix the core problem? Are GM’s many intelligent, talented people now more able to get done what they think needs to be done to create a better car? (Meaning without working laboriously up the hierarchy to somehow enlist the involvement of a sufficiently powerful senior executive.) Or, do the great majority of designers, engineers, and marketers remain nearly as frustrated now as they were pre-Lutz?
Unfortunately, on this question the book is silent. The role of personal judgment is clear. Design is important, and good design can only be recognized by someone with good judgment, not some left-brained type following a process. More broadly, judgment must fill in the void left by the eliminated processes. People must rely on their judgment, their “gut,” to make many different decisions with an eye to the superficially simple goal of selling more cars.
How many people possess the necessary judgment? Apparently not the VLEs who desperately need it. And if Lutz felt the need to constrain this high-ranking, carefully selected, thoroughly trained bunch within a new set of rules, then what hope is there for people lower in the organization? Though he spent much of his time educating the judgment of the multitudes, Lutz ultimately recognizes only one sufficiently gifted person—Lutz. How, then, can GM survive without him? Though he’s pushing eighty, apparently it can’t. Lutz retired—not for the first time—on May 1, 2010. But, as of last month, he’s back. Again. Still.