NEWS: Car Guys VS Bean Counters

June 8, 2011
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Things started auspiciously on my first day of work, September 1, 2001. I was handed what by all accounts was the best administrative support team in the company: Betty Gonko, administrative assistant, and Mark Walkuski, long-term professional chauffeur. It's hard for an outsider to slip comfortably into his or her slot in a new company; it's doubly hard when that company is of the size and complexity, and possessed of the cultural history, of General Motors. My "office" knew who to call, where to go, what to take seriously (almost everything at first, but I soon encouraged them to reduce that to about 20 percent), and what the so-called time architecture would mean to my evenings and weekends. Their efforts removed 80 percent of the reentry stress and permitted me to focus on what had to be done.
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After being led downstairs to be photographed for my magnetic all-door-opening ID tag, I reported in to Rick Wagoner. In his usual calm and gentlemanly fashion, he encouraged me to go through the overly ambitious product portfolio and cancel whatever I thought wrong or useless, and, if it was too late for erasure, perhaps inject modifications that would perfume the pig sufficiently to achieve at least a modicum of market success. (I was to be only partially successful at both, but I'll get to that later.)
I soon attended the first series of meetings of the NASB (North America Strategy Board) as well as the even more exalted ASB (Automotive Strategy Board), the most senior operating committee in the company, attended by the heads of all functions, direct reporting staffs, and geographic regions. Both of these meetings, which occurred monthly, lasted hours, if not a full day. Many three-ring binders were prepared, but most presentations had been distributed electronically in advance. Myriad subjects were addressed, from market performance by region to financial results, just as in any senior-level corporate meeting. But huge amounts of time were also devoted to far less important issues not of legitimate concern to such a senior convocation, like discussions of parts reuse or cost per stamping die. I remember one hours-long, heated argument over which of a list of future senior leaders were more "functionally oriented" than "general management" in their abilities. "Both" was not an acceptable answer. Small wonder I became infamous for pulling out my BlackBerry and working on my "BrickBreaker" scores during these meetings.
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Another ritualistic time suck was the annual creation and cross-checking of the so-called PMP (Performance Management Process). Whole mornings would be devoted to "aligning goals" among the meeting participants to ensure that each of the dozens of individual objectives were consistent across functions and geographies. This was called "box balancing" the PMPs, the "box" being where a functional leader's objective intersected, or overlapped, with that of a "geographic" leader. After one interminable, mind-numbing "global PMP box balancing" session, Rick Wagoner asked if everyone on the Automotive Strategy Board now agreed with their own and everyone else's objectives in the PMP. Seeing heads nod assent, Rick pronounced the coming year as good as in the bag. "All we have to do now is work to achieve those objectives," he said. "I know you can do it. So, we're going to have a very successful year."
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Say what? I submit that the whole idea of annual "management by objective" (the generic form of PMP) schemes is hopelessly flawed, an exercise in abject futility, possessing not a smidgen of customer value. My reasons for this categorically negative assessment are twofold. First, the "objectives" are all based on a series of dubious projections on market size, economic activity, competitor actions -- none of which ever come true, resulting in a PMP document that is, for all intents and purposes, worthless when finally published and never seriously referred to for "guidance" again. The "value" is only to the small army of human resources personnel who keep track of the whole mess.
My second reason for disdaining PMPs is this: a senior executive who needs a quantified list of objectives to know what he or she should be working on should not be a senior executive in the first place.
Because Soviet-trained fighter pilots were taught an elaborate sequence of carefully choreographed and endlessly practiced maneuvers to use when entering a combat situation, the Arab MiG and Sukhoi pilots were easy pickings for the Israeli Air Force, which, like its U.S. counterpart, relied on situational assessment, intuition, and flexibility in a fast-evolving air combat situation. The U.S. Marine Corps adage is "No battle plan survives the first two minutes after initial engagement with the enemy." This lesson was lost on GM.
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The North American meetings were little better. Presided over by Ron Zarrella, the previously mentioned brand management guru who had lied about having an MBA, they were equally devoid of pragmatic, customer-oriented focus. Zarrella was soon to depart, returning as CEO to the more comfortable and lucrative world of Bausch & Lomb.
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After one particularly dreary meeting, I asked Ron how he, as an outsider, could possibly deal with the clerks-running-the-business environment. His candid reply: "You fight it at first; then you see you can't change it, so you go with the flow." He was half right! I finally gave up on the administrative thicket but managed, ultimately, to change product development for the (much) better.
A little gem that came up in the North America Strategy Board meeting is the following, which I saved -- a "mission statement" of yet another high-minded, high-IQ group:
Creating an enterprise strategy and knowledge development resource to support decision-making of functional and operational organizations attempting to achieve enterprise objectives.
Come again? Zarrella quickly penned a note to me explaining that this was Vince Barabba's initiative. Barabba was GM North America's resident intellectual, an author and consultant who was very helpful in the needless intellectualization of a pretty simple business. The initiative "should be cut in half," the note concluded.
No kidding! But nobody cut it in half, and Ron was president of GM North America. He was the one to do it, but I presume he feared that "they" (Rick Wagoner and Jack Smith) loved Barabba too much to let it happen. Complete elimination is what ultimately took place -- but not soon enough.
A salient feature of these top-level meetings was the notable absence of any focus on the thing that matters most: the company's products. When they were on the agenda, it was always in a highly abstract form: a description of category, size, investment level, cost and profit targets, and other legitimate financial measures. And the discussions were invariably devoid of visuals. No photographs, no design renderings, nothing that would convey any emotional content or any compelling reasons why this particular vehicle would win against the competition. In one endless Automotive Strategy Board meeting, we were faced with an on-screen five-by-five matrix (or maybe even six-by-six) which, in its twenty-five (or thirty-six) cells, listed every known corporate priority. These ranged from "increase market share," "reduce assembly hours per vehicle," and "speed time to market" to "achieve diversity targets" and "reduce LTI (senior executive) count." Buried somewhere in the middle of this grand mosaic was a little cell, no bigger than the others, which read "achieve product excellence."
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I managed, barely, to contain myself. (Remember, I was new!) There, on the screen, was the core of the GM problem: "product excellence" was merely one of twenty-five (or thirty-six) things the company should work on. As I later told Rick Wagoner, that matrix should have been in the shape of a giant sunflower, with a huge "PRODUCT EXCELLENCE" in the giant circular field, with all the other initiatives, helpful as they were to the achievement of the big one, forming the pretty little yellow petals around the periphery.
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Meanwhile, over in the Product Development staff meetings, things were better only by a degree. My predecessor, Tom Davis, was still in office, helping with my transition into the company. Tom was a seasoned engineer, a GM lifer who had presided over the fantastic transformation of GM from an also-ran in the truck business into a near-dominant player. It is a testament to the excellence of the Detroit truck teams that, perhaps due to decades of benign neglect by top management, they knew their competition (there were only three players), knew their customers, understood the business and its demands, and always had a burning drive to set the bar higher with the next full-size truck or SUV. And this is why, despite repeated efforts, the vaunted Japanese could never put more than a minor dent in the Detroit Three when it came to the big stuff. The media would always gleefully announce that "Detroit's last bastion, the full-size truck" was about to fall now that Toyota had launched the new Tundra, or Nissan the Titan, but show me the owner of any American full-size truck or SUV who is just dying for a Japanese offering.
Tom was a good executive and administrator, and his meetings reflected this. It was all very procedural and process-focused. Are the engineering releases on time? Why are we behind on that prototype build? Has program X passed such and such a "gate"? Why is it late? What's the plan for recovery of the lost time?
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It was all tactical -- work that had to be done, of course -- but in the company's most senior product meeting, where was the strategy? What kinds of cars do we want to make, and why? Why are we failing? What needs to happen to turn this around? How do we raise our game? Meetings under Davis were more akin to the cleaning and maintenance of a complex machine that, on the car side, was producing the wrong products. The quality gurus preach "doing it right the first time and every time." And that was what the GM product development process was doing. But what never got said by the "Total Quality Excellence" consultants of the 1980s and '90s was that one must, above all, do the right thing right the first time. Perfect mediocrity, as GM had shown, was doomed to fail.
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Tom, his health failing, soon retired. He left with some trepidation: having read my first book, Guts, he had grave worries that this "opinionated swashbuckler" (a title long ago bestowed on me by the head of human resources at Ford) would dismantle or seriously modify the carefully crafted, predictable, reliable, and seemingly risk-free process that was turning out one terminally dull passenger car and crossover after another.
Actually, Tom's fears were well-founded, but I like to think of what I subsequently did as "creative destruction." Soon, I became immersed in GM's brands and their future products. I was scheduled for lengthy meetings with the brand teams led by very smart young men and women, all equipped with big brains and sterling academic credentials. Significantly, I was not allowed to look at the products until I had been subjected to seemingly endless presentations on the quintessential character of, say, Buick or Saturn. This involved staring at large boards on which were proudly displayed the "brand pyramid," a huge triangle broken into fields containing profound (but painfully obvious) information on the customer and why he or she would buy this brand. All of this was invariably accompanied by a wall of photography showing unbelievably good-looking people of all genders and races who would form the typical customer base of, say, the forthcoming Buick Regal. Other pictures would follow -- homes, furniture, watches, sunglasses, pens, pots and pans, and (almost without fail) a golden retriever or two, all indicative of the mood, or soul, of the brand.
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It was unmitigated hogwash; almost any of the boards, including the human models and the pots, pans, dogs, and tropical fish, could have been assigned to any of the brands. And, far from being peopled by upscale urban sophisticates, our passenger car owner base was comprised largely of corporate or rental fleets and the less educated, less affluent, less photogenic Americans whose main reason for buying GM was what the "new buyers studies" lump into the category of "price/deal." In other words, we offered such large incentives that the Pontiac buyer could justify his purchase to his sneering, import-owning friends on the basis of fiscal responsibility.
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To make matters worse, these "brand pyramids" were rarely, if ever, put together by the actual marketing people for that make. Instead, they were farmed out to advertising agencies, those vast repositories of "brand knowledge."
After the agony of feigning interest in the brand presentation, I hoped relief would come when the curtain finally lifted on the cars themselves. But relief soon turned to abject horror. The upcoming Saturn lineup was so ugly, inside the vehicles and out, that even the designer's mother would buy Japanese. None of the Saturns had any charm or ornamentation to delight the eye. Without grilles, none had any "facial" character, usually a key attribute in brand identification. Cars are like people that way.
When I remarked, "These vehicles seem somewhat devoid of character," I saw the marketing team beam with pleasure. This, I realized, is exactly what they had wanted! This is what they wanted to offer their carefully researched "postmodern" buyer, the person who (allegedly) didn't care about character, proportion, or design, but wanted a bland, anonymous appliance. Checking the brand boards, I saw that Saturn featured everything from store-brand detergents to functional, drab Birkenstocks. The Saturn Ion was an all-plastic marvel, as was the upcoming Vue. Both were too late in the process to stop. Both required loss-generating pricing and incentives to move them in the market. Some interior and exterior upgrades (including a front grille and some attractive chrome ornamentation) ultimately helped the Vue later in its life, but both vehicles showed that not even the "postmodern" buyer was willing to drive an amorphous blob.
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We then had a lively discussion about Buick. Here, the "experts" had decided that the brand's focus would cater to the needs of the elderly. Toward this end, a system called "Quiet Servant" was conjured up. To my amazement, I was shown an interior mock-up featuring no instrument panel and no visible controls whatsoever. It was to be the world's first car operated entirely by voice command. Speed, gas level, and other relevant information were projected on the windshield.
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"Folks," I said, "this is nuts!"
"No, no!" they insisted. They had shown a video to older people, where the fictitious driver merely said "headlights" or "left turn signal" or "radio" and the car instantly delivered. And, at the end of the video, 75 percent had expressed a strong preference for this miraculous system. But I'd learned to be skeptical of research in which subjects are shown an ideal, simplified version of a new technology where everything just works. Real life never quite lives up to the fantasy. Still, I agreed to drive a prototype.
I will never forget that drive through downtown Milford, Michigan, and the engineer sitting next to me probably won't forget it either. At his urging, I asked for "more cold air." "No, no!" he said. "You have to scroll verbally! First say 'climate control.' When the car says 'climate control,' you say 'blower.' When the car repeats 'blower,' you say 'up one.' Same with temperature." Of course, it wasn't that easy, and a comedy of errors ensued. I did the best I could, trying to remember the sequence. So fixated did I become with the marvels of voice-input technology that I casually cruised through two red lights, nearly causing an accident each time. Quiet Servant should have been called Quiet Assassin!
The new system officially died the next morning. I announced it to the Buick team in person. One earnest young woman almost broke out in tears, seeing the whole purpose of the last two years of her life float away. But, to my surprise, it was a hugely popular decision, and many congratulated me on having the courage to eradicate what had been a festering sore in product development. It was going to cost a fortune to develop, and nobody knew how to make it work.
Flushed with success, I pressed on, terminating more bad designs and bad projects, but never enough.
Excerpted from Car Guys vs Bean Counters by Bob Lutz by arrangement with Portfolio Penguin, a member of Penguin Group (USA), Inc., Copyright (c) 2011 by Bob Lutz
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