Posted on 06/20/2011 8:04:15 AM PDT by equaviator
Bob Lutz tells us what happened to General Motors and how he helped put it back on track just in time for the Crash of 2008.-
General Motors has been an American emblem for decades. It has produced many iconic vehicles during that span from the classic Chevrolets of the late 1950's to muscle cars of the 1960's and the quintessential American sports car, the Corvette. For someone who grew up in the 1960's and 1970's GM vehicles were a dominant part of American culture and a distinctive part of what transportation was all about.
Despite all this success, something went wrong. GM lost its position as the ultimate automobile maker and fell behind the rest of the industry. That's where Bob Lutz came in. A life member of the automotive executive fraternity, he was hired away from battery maker Exide to rework GM's business model and help it regain the former position as "king of the hill."
Thus begins Mr. Lutz's exposition on the automotive industry and what makes it tick. If you don't know anything about what makes a car maker tick, this book will give you all you need to know and more. You will probably never look at a car in quite the same way again. At the same time he provides a treatise on what is wrong with many American businesses, which have gotten bogged down in processes and have forgotten what makes them successful; essentially the same thing that Mr. Lutz found at GM and what he fought to correct. He discusses what went wrong and the step-by-step process he undertook to eliminate the problems, despite intense opposition.
This is not a technical book. It is written as a personal narrative with many humorous anecdotes used largely to illustrate exactly what was wrong with the GM operation and how they had screwed it up. He also illustrates extremely well the role the automobile plays in American society and why. This provides an extremely important insight into how the market for motor vehicles differs from toothpaste or canned soup, and why skills that work in other industries may not transfer well to the auto industry. Interestingly, GM had, at one point, made the reverse case and began hiring people from other industry groups in the mistaken belief that if you can sell toothpaste you can sell cars.
Unfortunately, Mr. Lutz falls short is in his exposition on the development of the electric vehicle, which GM had actually pioneered long before the competition, and whether or not stored electricity was viable as a long-term energy source for the automotive industry. In later chapters it becomes clear that he understands that the Chevy Volt has more value to the company as environmental propaganda than as a revenue source, but at the outset he seems to believe that Volt-style vehicles were the next big thing in the car market. So far they haven't been significantly successful.
A second area of weakness is in his understanding of the media. For decades the American automobile industry has had a love affair with the media, from entertainment to information. The automobile was a part of American life and in many instances bigger and more powerful was better; no questions asked. However, since then the media have developed an agenda of their own. GM was placed on their hit list for a variety of reasons. The result was that Japanese gas-hogs were lauded while domestic vehicles with better miles per gallon ratings were treated with distain. This may have affected Mr. Lutz's corporate strategy with respect to media relations. In any event, it is this writer's opinion that it made the Volt less effective as a publicity/propaganda weapon than would otherwise be the case.
In the end, the real strength of this work is Mr. Lutz's understanding of the business environment in general, and how it is different from the true hard sciences such as chemistry and physics where everything can be quantified. In business, you can also quantify things but that does not necessarily guarantee a successful product because the human factor may render all of the numbers irrelevant. The concluding four chapters of "Car Guys vs. Bean Counters" could be used as the core of an excellent business text on exactly why scientific management is a bad idea and that an MBA may know a lot less about how to run a successful operation than Joe Average who runs on his hunches and is strongly attuned to his market.
This last is the real lesson of Car Guys vs. Bean Counters; the simple fact that GM's management had become distracted from what made them successful. How he pulled the organization back to reality provides us with some significant lessons in business management as well as in politics. And foremost among these is the importance of the right people in the right places; people who know what they are doing, regardless of what the number say. That is not to say that numbers are useless, but they are a tool that has a proper place and must be use properly or not at all.
For many years I have been a doubter when it came to scientific and mathematical management. Certainly, you have to be able to add the numbers to determine whether or not you have a profit or loss, but the business schools should take another look at the limitations of numbers and put this book in the classroom as an object lesson to those who refuse to recognize that you can run a business by the seat of your pants, if you truly understand what it takes to keep your customers happy.
unions
What happened to GM?
They dropped their Impala, Roadmaster, and all their rear wheel drive cars for no good reason
My old Roadmaster will haul 6 people in comfort with power to spare and still get 26 MPG, which is as good as their front leading Buick model today, which will only seat 4.
It handles better and rides better.
They dropped the Astro van and brought forward a piece of junk called the Venture. Full of Mexican plastic parts thay fall apart in 2 years.
They could go back to the Chevy II and have a nice small car with good mileage, but instead they put out junk.
So that’s it, eh? Just one 2-syllable word?
I’m expecting that Lutz will have voiced his opinion(s) on the UAW but I also expect there to be much more to read about the white-collared “14th Floor” at HQ.
Any company that would offer a more traditional cars with front engine rear wheel drive would make lots of money. Take any care like the Malibu. Just rearrange the engine and give it rear wheel drive and you have a car that could compete well with BMW 5 series. A poor mans 5 series if you will.
My father worked for GM for 42 years — I was born and raised in Pontiac, Michigan, and never thought I would buy anything but a GM car. Rented a Chevy Cruze from Hertz last week, and it was an embarrassing piece of crap. Absolutely no back seat leg room at all (in reality, it’s a two-seater), and the dashboard display was horrible. And why put the lock/unlock switch to the right of the steering wheel? Forces the driver to get behind the wheel (which is barely adjustable) before s/he can unlock the doors for others. And the key fob was enormous! I hated, hated it. GM has truly becom Government Motors. I’m buying Ford or Lexus from now on.
Similar situation with many companies.
“Similar situation with many companies.”
Probably.
Did anyone else happen to catch Autoline Detroit yesterday? Lutz does have a certain situational awareness and he describes what he sees in a way that is most refreshing...Yes-sir-ee Bob!
They killed the Camaro/Firebird with no immediate intention to replace it.
Then they noticed the success of Ford with their new Mustang, and sprang into action, taking years and years to redesign their Camaro—no Firebird.
They built the gawdawful looking Aztek. They built FWD Cadillacs. They had no answer to Lexus, Infiniti, Acura
Here are the lessons that GM has never learned, and why I won’t buy GM:
1. Unions
2. People want a reliable car. Think Toyota, as a generalization. We don’t want peeling paint, cheap plastic breakable interior components, or major repairs.
3. People want decent gas mileage.
4. I don’t want an interior, dials, and controls which are poorly thought out.
...”They built FWD Cadillacs.”
Cadillac Eldorados were FWD and so were the Olds Toronados going back to the 60’s. I think the Buick Rivieras were also FWD. All were great GM cars.
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