By Scott Pohl, WKAR
http://stream.publicbroadcasting.net/production/mp3/wkar/local-wkar-974496.mp3
EAST LANSING, MI –
The career of Bob Lutz has taken him to top-level posts with General Motors, BMW, Ford, Chrysler, and finally back to GM. His eight years as vice chairman in charge of product development ended with his retirement last year.
He's written a new book called "Car Guys Vs. Bean Counters: The Battle for the Soul of American Business." In it, Lutz recounts how his return to GM put him in charge of executives focused on all the wrong things.
Lutz told WKAR's Scott Pohl this week that it was as if everybody "had put their judgment and common sense on hold."
BOB LUTZ: "A lot of sub-targets were pursued, secondary issues were ground to death, and yet nobody was focusing on the big picture, which was to produce vehicles that would genuinely delight the public when they came out."
SCOTT POHL: "And so, what did you set about doing to correct that?"
LUTZ: "It required an organizational change, because the product development process was segmented and broken up under people called Vehicle Line Executives, or VLE's, who were sort of like program managers, and that's a very legitimate system. The Japanese use it, Chrysler, everybody uses that system. The difference is, in the GM system, these program managers, or VLE's, also had responsibility for design. The vice president of design did not have the final say over what shapes or designs the vehicles had when they went to market, and we had 14 VLE's, and I defy anybody to find a car company anywhere where 14 senior executives are capable of rendering esthetic judgments."
POHL: "I wanted to ask you a little bit about calling the book "Car Guys Vs. Bean Counters," when in the book, the economic factors that you cite in leading to GM's bankruptcy include things that no bean counters anywhere could have anticipated. The housing market collapsing, the spike of gasoline prices and that sort of thing. Can you explain to me the role of the bean counters at General Motors, when there are outside factors like that, that were at play?"
LUTZ: "These are unforeseeable events, which means that the creative person who doesn't do the analysis is on equal footing with all the brilliant guys with their numbers! And I maintain that if GM hadn't turned towards scientific management, kind of in the early 70's, where the hegemony of the financially-oriented people began, and if General Motors had continued to focus on great cars like they did in the 60's, we never would have seen that gradual decline from 50% market share down to about 22% market share.
"GM was very much in the process of fixing its problems. The problem was we were weakened! And so, that perfect storm that occurred just blew us away."
POHL: "When you look at the new GM, do you think they have the right mix of car guys vs. bean counters now?"
LUTZ: "Yes, I do, because while Dan Akerson is not, by his own admission, not a car guy, but he is a very, first of all, a good leader, forceful leader, and he has extremely good common sense, and he tells himself quite simply, from the 70's to about 2001, 2002, General Motors was losing market share and reputation and profitability; ever since we brought out the great cars, the market share is up, the profitability is vastly up, the average transaction prices are up, reputation is up, so he says, what was the difference?' Well, when we focused on the money and didn't focus on the excellence of the cars, the company gradually slid into the abyss. When we reversed that, profitability is excellent, market share is back, reputation is coming back, so he tells himself quite logically, why would we change course?'
"The mission statement of General Motors, I really like, is to design, build, and sell the world's best cars and trucks. Nothing about shareholder value, and the environment, and diversity of the workforce. We've all read those complex mission statements that fill a whole page and nobody can remember anything about it when they've read it. So, this is very simple: the focus is on great cars and trucks, end of story."