Car Guys vs. Bean Counters - Bob Lutz [95]
If dogs don’t like the end product, the dog food company is sunk.... It’s a very simple maxim that is blissfully ignored by higher business education, which teaches all of the “techniques” but fails to train people in the importance of “the dogs.” Rather than bask in the false belief of the superiority of American business education, the big business schools should be asking themselves how and why it all went wrong. They have produced generations of number-crunching, alternate-scenario-loving, spreadsheet-addicted idiots-savants. They should be ashamed.
12
Of Management Styles
I AM FREQUENTLY ASKED, ESPECIALLY IN LIGHT OF HAVING EXPERIENCED four different CEOs at GM over a period of sixteen months, what kind of leadership style is the “correct” one for an automobile company. And while many of the principles may be universally applicable, the direction of a large car company is distinctly different from, that of say, GE. The latter is a conglomerate comprised of wildly different companies, most completely unrelated to one another, with their own priorities, problems, products, and customers. “Running” this conglomerate in detail is clearly beyond the capability of any one man: the fields of action are too scattered and too diverse. What leadership does in a conglomerate like this is set the goals, the measurement criteria, and the overall governing policies; select the right leaders for the individual businesses; measure progress; and sell underperforming units while adding new, promising entities to the portfolio.
A car company, on the other hand, is one enormous, hugely complicated organism that has many moving parts, all closely interrelated and interdependent. Many of the company’s activities are day-to-day: running the plants to produce components and assemble cars, procuring supplier parts, moving the finished vehicles to the dealers, billing same, and booking the revenue. The operations portion of the automobile business has been thoroughly optimized over many decades, doesn’t vary much from one automobile company to another, and can be managed with a focus on repetitive process. It is the “hard” part of the car business and requires little in the way of creativity, vision, or imagination. Almost all car companies do this very well, and there is little or no competitive advantage to be gained by “trying even harder” in the procurement, manufacturing, or wholesale area.
Where it suddenly turns complex, and where the winners are separated from the losers, is in the long-cycle product development process, where short-term day-to-day metrics and tabulation of results are meaningless activities. Despite the advent of many new computer tools to speed engineering, testing, and certification, the “initial idea” to “first unit off the line” time is still, depending on the complexity of the product, about three and a half years. (Most of the compression has been eaten up by vastly more stringent safety, emissions, and fuel economy requirements.) It is here that the recipe of the dog food is determined.
Astonishingly, in this critical product creation area, where the future of the car company hangs in the balance, the much-scorned autocratic style of management works well, and numerous success stories confirm it. The big proviso, of course, is that the autocrat must be so steeped in the car business, and have so much taste, skill, intuition, and sense for the customer, as to be nearly infallible. (I shall eschew discussion of the less-than-knowledgeable autocrat: delving into things he or she knows little about and ordering, demanding that it be done this or that way, is a near-infallible recipe for disaster. According to many, the former chairman of Daewoo many