Car Guys vs. Bean Counters - Bob Lutz [92]
I’ll be watching!
11
What’s with American Business Anyway?
(Ask the Dogs!)
GM’S BUSINESS PHILOSOPHY OVER THE PAST THIRTY YEARS HAS BEEN mired in the belief that the power of analytical intellect can solve all business problems as well as create viable strategies for success. This dogma is by no means confined to General Motors or the automotive industry: witness the decline and ultimate failure of many iconic U.S. business enterprises, household names that have gone out of business, been taken over, or shrunk to a shadow of their former selves.
Some will say, “It’s the unions; they wrecked it.” Others will say, “Government meddling and regulation.” As I’ve said, there’s a case to be made for both explanations. But the manufacturers and traders in many other countries deal with unions as entrenched and powerful as ours and are entangled in a web of governmentwoven regulations that make them envy the U.S. environment, and yet these foreign companies, automotive or otherwise, somehow survive and in many cases achieve excellence in all they do. They sell their wares at premium prices in the United States to a willing public that sees these foreign products as superior.
Warren Buffett, iconoclastic billionaire, once said, “If I had an IQ of 160, I’d sell forty points.” This seems a strange statement, coming as it does from one of the savviest and most successful businessmen ever. But my personal observations over forty-five years in business lead me to conclude that Mr. Buffett, as usual, is on to something.
American business, especially in the service and manufacturing sectors, has become, as the Brits like to say, “too clever by half.” (Not quite Warren Buffett’s percentage, but close enough.)
The problem lies, as it so often does, in the deliberate intellectualizing of a very simple task: creating and selling a meaningfully superior product or service to the public. It’s not rocket science. You design, you manufacture, you sell, you collect money, and you reinvest.With any luck, some of the proceeds will reward the shareholders. Somebody has to keep the books, and someone needs to recruit capable employees and pay them competitively.This was all competently taught by the nation’s business schools for decades—until they discovered what I’ll call the “Sense of Academic Inferiority.”
Bluntly put, in the academic environment, where the “hard” sciences rule, where physicists are pushing the boundaries of knowledge and seeking the elusive “God particle,” where chemists use ever more sophisticated means to explain the complexities of the stuff all things are made of, the “professor of business” gets no respect! No “business researcher” can be identified as “pushing the boundaries of accounting” (although, arguably, many businesses have tried of late). There is nothing mysterious or arcane about design, customer delight, quality, or an efficiently run personnel department. Business educators, for the most part, felt like the cleaning and maintenance crew in an art gallery: necessary, yes, but hardly the main attraction. But how to emerge from these nonintellectual shadows, how to garner the respect of the “true” academics?
The answer presented itself at the close of World War II, when Robert McNamara (later to become president of Ford Motor Company) and his “Whiz Kids” attained notoriety through their use of mathematical optimization concepts on behalf of the Defense Department. Mathematical modeling, quadratic programming, dynamic programming, game theory, and more were used to improve logistics, schedule bombing raids, and generally bring order to a fairly chaotic environment. (Of course, there was no “end customer.”)
The world of business academe snapped it up, wolfed it all down, and made it its own. No more inferiority complex on campus. We’re scientific now! We use math. We generate “optimization