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By Root 896 0

prowess. Regular meetings were held between the two management groups; areas for legal collaboration (such as hydrogen fuel cells) were explored, but to no avail. In retrospect, I believe Toyota played us. We were sincerely interested in a good relationship; Toyota, on the other hand, was always tight-lipped, except to tell GM repeatedly what a fine company we were, how much they admired us, and how they harbored the modest dream of being a really big car company . . . not as big as GM, mind you—they would never be that presumptuous. But still, you know, big. Meanwhile, they were on a maximum growth plan to become “Number One” in the world, an ambition that was to be attained briefly, but which wrought serious harm in terms of quality and their much-polished reputation.

The NUMMI relationship was ultimately to give birth to two generations of small crossovers, sharing common parts but with styling differences: the Pontiac Vibe and the Toyota Matrix. I hope Toyota made a little money on theirs; we lost a bundle on ours. Have you been paying attention? Test question: which one of the “twins” performed better in quality surveys, Matrix or Vibe?

At the end of the 1990s, through a combination of unfortunate government regulation, an antiquated non-product-driven culture, a union incapable of agreeing to anything but “more,” U.S. geopolitical and trade policies that favored foreign producers, and an increasingly hostile American media that loved picking on the big, dumb guy, GM’s U.S. market share and profitability proved increasingly elusive. Worse, what profitability there was came mostly (at times more than 100 percent) from our then-whollyowned financial company, GMAC (General Motors Acceptance Corporation). This gave rise to the oft-repeated phrase “General Motors is a finance company that also produces cars and trucks.” The basic vulnerability of the company was obvious to all, and Jack Smith and Rick Wagoner were determined to solve these monumental problems.

Among many initiatives of the mid-1990s was the ill-advised foray into what is called “brand management.” Let’s back up: Every U.S. auto company has, at some point, been influenced at the board level by the CEO of a consumer products company (Paul Sticht of RJR–Nabisco at Chrysler, Joe Culman of Phillip Morris at Ford, and, during this time, John Smale of Procter & Gamble at GM). What all of these experienced CEOs had in common was a deep belief, based on decades of experience with detergents and toothpastes, that “brand management” was the only effective way to run a multibrand operation. In its most basic form, it means putting some smart, young marketing person in charge of Crest toothpaste. If she wants a new flavor or package design, she asks the chemists or the package designers to whip up a batch of, say, ten thousand tubes to try in a test market like Skokie, Illinois. When the product is ready, the brand manager sees to it that it’s distributed there and appropriately advertised locally. If it takes off, it might be rolled out nationally. If it flops . . . well, the experiment didn’t cost that much.

Without question, the brand management approach works in the world of soap, toothpaste, and cleaning supplies.The error lies in transposing it to cars, which every one of the former consumer products CEOs tried to do. Here’s where it goes awry: a brand manager in the car business can’t do a small test batch. Changing the design or engineering of a car consumes hundreds of millions of dollars and three years. And the federal government doesn’t care whether it’s a test batch or not; every car model, regardless of production volume, must be fully certified from an emissions and safety standpoint. Unlike a Crest toothpaste tube, these cars, assuming a negative test outcome, will hang around as worthless orphans for years.

I advanced all of these arguments in 1990, when RJR–Nabisco’s CEO convinced Lee Iacocca to go “brand management” at Chrysler. The late Jerry York, a later ally of Kirk Kerkorian bearing a reputation for near-infallible business instincts, inherited