Friday, September 2, 2011

Summer Reading: Bob Lutz - Car Guys vs. Bean Counters

A wise friend of mine once told this scribe, ‘envy is a useless emotion.’ That friend had never met Bob Lutz.

There is much to envy about ‘Maximum Bob’, as he is known in auto enthusiast circles. A quick look at his resume reveals his decorated career spanning over 40 years, traversing between industry juggernauts like General Motors, Chrysler, Ford, and BMW. Driven by passion for all things automotive, the prolific businessman had a hand in overseeing development of some of the most influential and sought-after vehicles. These include the lust-worthy Dodge Viper (one of the first V10 powered production cars in the world) and the BMW 3-Series, the modern day benchmark in the lucrative premium saloon segment.

Now, Lutz adds ‘New York Times Bestselling Author’ to his list of accolades. His latest book ‘Car Guys vs. Bean Counters’ is a revelatory tell-all about his time as Vice Chairman of Product Development at GM. What Lutz envisioned as a 3-year corporate makeover for the stagnant company turned into a glacial decade-long tenure; with Lutz wading through the overbearing bureaucracy and undoing years of over-intellectualized thinking that had paralyzed the once proud American powerhouse.

There was plenty of blame to go around for GM’s misgivings, and Lutz made sure all were held accountable, starting with Vehicle Line Executives (VLEs). These MBA-backed, finance driven types were the ones who saw through every aspect of a vehicle from initial design to final production.  The problem laid in their goal-oriented approach towards the product development process:  Every minute detail was micro-analysed through hideously complex mathematical equations and tedious PowerPoint presentations, all aimed at achieving abstract, internal goals and conforming to a pre-defined set of ‘brand characteristics.’  

Originally conceived with the noble intention of reinforcing brand identity, these characteristics did little except  impede the imagination. Under this bean-counting reign the vehicle designer was completely marginalized as overall quality and aesthetics became an afterthought. So while many of the resulting products achieved all the objectives as outlined by these executives, they failed to ignite consumer lust and realize the sales figures the maths had originally predicted. This ‘Formula to Mediocrity’ was what Lutz fought so hard to abolish, and runs completely opposite to the designer-centric ethos that GM embodied in the 50s and 60s.

There were exceptions, however. The VLEs responsible for GM’s Trucks Division and the Chevrolet Corvette escaped Lutz’s scathing assessment, as both programs were run by people with an unbridled passion for their work, with sales and critical acclaim to match.

Lutz also had a bone to pick with much of GM’s senior management.  Many came from the consumer goods sector, and brought with them a self-contained, mass market business philosophy. While test batches might be financially feasible in the world of toothpaste and alternatively flavoured sodas, a vehicle is a complicated assembly of varying parts and components, all of which must work seamlessly with each other.  It’s a far more invested effort requiring years in planning and execution, so success is all the more important to the bottom line. Sadly, few cared about GM as an automotive manufacturer. To these executives GM was merely a vessel for them to fulfill their matrix of abstractions. Responsibilities to the welfare of shareholders and being good corporate citizens are good aspirations to have, but when the foundation of ‘making cars and trucks that people want to buy’ takes a backseat that’s when things go horribly awry.

Lutz went on to point out that GM’s fatal flaw lied not in its lack of engineering or leadership – There was plenty of both – But its objective-oriented approach to product development instead of a consumer-oriented one. The company was overrun with number crunchers so entrenched with technical metrics and sub-optimization that they neglected the most important number of all – Sales figures. Consumer acceptance was simply taken for granted, and when sales numbers failed to meet expectations the obvious conclusion was ignored – That GM was making products the buying public didn’t want.

Other tales of want and woe were interspersed in the book, including how the much maligned Pontiac Aztek came to being, and how Lutz’s vision for the future of electric mobility became GM’s rebirth in the Chevrolet Volt. He also shared his distaste for GM’s acquisition of Saab, seeing the move as a liability but stops short of calling it ‘short-sighted’.

Still, despite the ‘Extreme Lutz Makeover’, GM succumbed to bankruptcy on 1 June 2009. Lutz was frank in admitting it was an inevitable outcome no matter what he did; the perfect storm of a sub-prime mortgage crisis coupled with rising gas prices crippled the automaker. The company had to ask the federal government for an emergency bailout totalling $49.5 billion in order to stay afloat, granting it the unceremoniously unflattering title of ‘Government Motors’.

GM has since learned its lesson, and now with a much leaner portfolio has refocused its mission: “To Design, Build and Sell the world’s best cars and trucks.” Lutz remains involved with GM in an advisory capacity, and was hopeful in concluding that GM will continue on the path to excellence he forged a decade ago.  A mandatory read for those who are fascinated with the inner workings of the automotive industry, and proof that Lutz is equally adept at putting thought to paper as he is overhauling an American industrial icon.

1 comment:

  1. My review on my LinkedIn reading list: "After reading this, you will want to read Lutz's other car book for car guys: "Guts"... or should it be Gutz? Anyway, whether you love or hate Lutz, whether you love or hate cars, you will enjoy the tales told out of school about how they are conceived and brought to market - or, rather, how NOT to conceive them and bring them to market. Lutz fills in all the blanks from Rattner's "Overhaul" about what was REALLY wrong at GM and other car companies. (That's why you have to read "Guts" to find out about how BMW, in its own way, can be just as screwed up.) There are large portions of diatribe against the bum rap GM continues to get from the U.S. media - even to the extent of attacking/dismissing the Volt. (GM has upped its production numbers, but needs to rein in the dealer above-sticker pricing nonsense <- my observation, not in the book.) Lutz is also for steadily raising fuel taxes - as a policy alternative to CAFE - and decries global warming as bunk and cars as major contributors as hooey. You don't have to agree with him to enjoy the book. It might help to know that he finds himself defending GM against the Left (media and politicians) and right (politicians and talk radio types). He admires Whitacre and wishes the best for Akerson. He is somewhat ambivalent regarding Wagoner - especially as regards the sheepish performance before Congress. One can only wonder what Lutz would have done with that opportunity. Finally, Lutz lays the blame for the bean counting/non-customer-focused management style prevalent in the U.S. at the feet of obtuse business schools. Management by numbers is ruining America. We need to bring Lutz-style passion back to the business of making products that people want. ... You will be forgiven for perceiving not-so-subtle Lutz juxtapositions of his thought processes and those of Richard Branson and Steve Jobs. C'mon, Bob. People are not lining up at 6 a.m. to buy GM products.....yet." - Roger C Lanctot