Straight talk from Bob Lutz on 6 auto CEOs

Jun 04, 2013

Always outspoken

Since retiring in 2010 after nearly five decades as a top executive at four automakers, Bob Lutz has found a second career as a myth-puncturing author and speaker. In this highly personal follow-up to Car Guys vs. Bean Counters, published in 2011, Lutz relates what he calls the "bizarre foibles and rank stupidity" of his bosses, and grades them on their leadership qualities. Lutz is a hard marker: Most of the CEOs in Icons and Idiots: Straight Talk on Leadership are found wanting in several qualities.

This book is about leaders and leadership, a compendium from my more than 60 years of observation. These tales do not constitute a "hatchet" job or an attempt to "get even." The years have caused anger and resentment to dissipate. What I have attempted to do is to show the complexities of successful leaders by exposing both their human weaknesses and, in most cases, their successes. My bottom line is that most successful leaders are mentally and emotionally askew. It's precisely that they are impatient, stubborn, opinionated, unsatisfied, and domineering that makes them successful.

Since the business world likes quantification, I have attempted to craft a brief overview of each of the subjects examined in this book. I have evaluated them, using a scale of 1 to 10, on the leadership traits I personally believe are the most important: integrity, courage, style, communication skill, toughness, adaptability, consistency and focus, sense of priority, creativity, and results. A perfect score would be 345.

Eberhard von Kuenheim

BMW chairman 1970-93

Lutz says: "Not always a delight to work under, he transformed BMW into a global luxury-car powerhouse."

Lutz grade: 297

One day, in an executive meeting, von Kuenheim asked how many unsold coupes were still in company inventory. I said I hadn't checked recently but believed the number to be around 200. "I'm shocked that you don't know the exact number, Mr. Lutz," von Kuenheim said. "As of this morning we had precisely 207 in our stock." The technique of fishing some arcane bit of information out of a subordinate's area of responsibility and then, in front of others, asking him for precisely that number or fact, is a grossly unfair tactic used by bosses to keep their direct reports fearful. It does nothing for healthy cooperation among the individuals who are supposed to be collectively driving revenue and profit.

My first disagreement with von Kuenheim surfaced almost immediately and, as tensions mounted, my reaction was counterproductive. Feeling frustrated by my inability to connect with him to honestly discuss our work relationship problems, I took to expressing my feelings and anxiety and frustration to my subordinates and colleagues. While they were sympathetic on the surface, it has to be assumed that much of my negative assessment of his leadership style went right back to von Kuenheim. It no doubt worried him, perhaps even caused him to fear that I was plotting to unseat him. Thus, our relationship was trapped in a circularly interactive downward spiral until I accepted an offer from Ford.

I was determined to hate von Kuenheim for the rest of my life, but as the years passed, we often had dinner. I couldn't help liking the older, wiser, more self-confident von Kuenheim. Former colleagues told me he had become more open, more sharing, and less Machiavellian. How good a CEO was he? In a word: miraculous. During his tenure, BMW became one of the world's top three luxury brands. Thus, ruling by secrecy, fear, deft maneuvering, and a sorry lack of trust in his team, the aristocrat-cum-street fighter has to go down as one of the most successful automotive CEOs of all time, based on the wealth he created for shareholders."

Phillip Caldwell

Ford CEO 1980-85

Lutz says: "Hard to like and deprived of nearly any sense of humor, he gained respect for his focus on quality and product excellence."

Lutz grade: 241

Despite spending much time with Phil Caldwell, in groups as well as one-on-one, the feeling of unease in his presence never left me. Phil was a teetotaler. No wine, spirits, beer, coffee, or tea. I got used to his disdain for alcohol. Whenever the server asked about a predinner cocktail, Phil always demurred. His answer, unfailingly, was "Go right ahead if you feel you need it." The effect was that I no longer wanted to drink, since I didn't want to appear an addict.

Phil was not one to throw in the towel in discussions. Once I delivered a two-hour presentation on a new truck program. We had not counted on Phil's near insatiable appetite for detail, as well as his manifest need to be perceived as a major expert in the commercial vehicle field. I couldn't get through the presentation, being constantly stopped. Phil drilled through stratum upon stratum of my then-considerable knowledge of what we were doing, why, and against whom, relentlessly bombarding me with ever more arcane questions. Finally, there was a reminder we had a dinner reservation. Phil Caldwell reluctantly declared a truce and said we would continue this vital dialogue some other time (which never came).

It would be tempting to dismiss Caldwell as a sort of corporate Captain Queeg: petty, focused on personal prestige, uncaring about his subordinates, and given to poor business judgment. [But] that would be the wrong conclusion. While lacking any real operational or "car guy" interests or skills, and being overly passionate about getting more data to support eminently logical decisions, Caldwell had one powerful sense of purpose that overrode his many quirks and foibles: He was totally focused on making Ford (f) the quality leader of the world. He teetered on obsession. But when it came to quality, it took an obsessive personality to energize a culture raised on "nobody's perfect."

Harold "Red" Poling

Ford CEO 1990-93

Lutz says: "Tough, opinionated, uncompromising, he was of the school that held 'If you can't measure it, it doesn't exist.'"

Lutz grade: 271

In the world according to Poling, no project was too trivial to be questioned, no cost too low to be given a 20% cut, no outlay sufficiently justified to not be closely investigated for padding or outright deceit. It was financial micromanagement at its absolute worst. The theme of my financial recklessness was pressed home repeatedly. The tragedy of this type of bean-counter-ism is that besides applying the brakes to progress and being thoroughly demoralizing, it actually drives hidden waste and cost ... cost spent investigating, cost spent justifying, and cost driven by the clever troops finding an alternate way to get the job done.

I hated working for Red. It was sort of like Marine boot camp all over again. [But] Red taught me that the tough, uncompromising, unfeeling, almost nasty approach to initial cost and investment estimates could produce meaningful savings. It forced the planners to reexamine how much of the tooling and facilities could get reused, how many parts could be carried over from the past model, how many body styles and versions were really necessary as opposed to nice to have. The Poling approach served me well during my later tenure at Chrysler and my last tour at GM, although I was always at pains to leaven it with humor, engineering, and marketing judgment.

Lee Iacocca

CEO Chrysler 1989-92

Lutz says: "Action-oriented, motivational, focused, he was surely one of the most powerful, charismatic, and successful leaders in American industrial history."

Lutz grade: 305

In my inaugural meeting in Lee's office, his performance was, in many ways, typical. He was effusive, enthusiastic, expressing his opinions with a firmness that left no doubt in the listener's mind that these were facts that could not be questioned. I wondered: Should I tell him bad news? Would I alienate my new CEO by giving him market research he didn't ask for? He clearly didn't like my smart-ass attitude, and, not having much practice, didn't like an underling telling him he was wrong. It's strange. I find it hard to comprehend a leader who feels threatened by subordinates. But one of the little-known aspects about Lee Iacocca is that beneath the commanding stage presence, there was a side that was vulnerable and insecure.

I was not to be Iacocca's successor. Many on the board thought I should be, but Lee fought it vehemently. I was too ambitious, volatile, unpredictable, undiplomatic, emotional, and way too prone to saying the wrong thing at the wrong time. In short, I was too similar to Iacocca! He instituted what he called his "ABL" succession program: Anybody But Lutz.

Iacocca was at his finest when energized, when there was a crisis, when he had a sense of mission. You couldn't help but admire his focus, the ease with which he rattled off every problem and initiative in front of the company. His energy, optimism, and enthusiasm were infectious: He was able, by the power of his personality and his debating skill, to make one believe things that were manifestly impossible or untrue. Mercurial, inconsistent, controversial, a little insecure, given to posturing and bluster, Iacocca nevertheless was the incarnation of the successful leader.

Robert Eaton

CEO Chrysler 1993-98

Lutz says: "A gentle leader of modest charisma and command presence, he was badly outmaneuvered by the wily Germans in the ill-fated 'merger of equals.'"

Lutz grade: 229

When Bob Eaton was recruited to succeed Iacocca, he was head of GM Europe. Bob was experienced, polite, well-spoken, and knew the business. He showed the mature, calm confidence and self-assured manner that had been honed in decades of facing upward and looking good at GM. We had a good sharing of responsibilities. The products were hits, and we made sure that Bob Eaton got most of the credit. Bob's considerable intelligence told him to leave well enough alone and not try to insert himself or his authority into something he realized he could hardly improve.

After Daimler-Benz and Chrysler merged in 1998, Daimler's Jürgen Schrempp came to Auburn Hills, and he and Bob sketched out the beginnings of what was to be heralded as a "merger of equals." A tall man with a powerful, commanding physique and a stentorian voice, Schrempp was, to put it mildly, a brash giant next to Bob Eaton's small, slightly rumpled, slightly pudgy, and generally low-key appearance. It was pretty clear that this was not going to be a jointly run company, and Bob soon departed, richer by a reported roughly $250 million.

The fortunes of Chrysler soon went south. Bob Eaton became a pariah, the architect of Chrysler's semi-demise, the gullible fool who had been tricked by the worldly J. Schrempp. What got lost in all the vilification of Eaton was that he had done what the private enterprise system expects of its CEOs: He ran a great company, made it a desirable partner, and merged it into a larger company, in the process creating enormous wealth for Chrysler's shareholders. Bob Eaton had his reputation unfairly tarnished.

Rick Wagoner

GM CEO 2000-09

Lutz says: "By education, background, temperament, physical stature, an almost ideal CEO. Those who malign him fail to comprehend all the good he did."

Lutz Grade: 239

In contrast to other executives I've known in my career, Rick Wagoner showed little in the way of "peculiarities." He was always polite, kind, and ready to hear opposing views. His style was modest: He eschewed executive trappings and even excessive compensation, believing, correctly that he was a servant of the shareholders and thus simply a hired hand. He was persuasive, mentally agile, and an excellent communicator.

Rick was the very picture of a leader who genuinely cared about his people. He trusted his direct reports and rarely micromanaged, sometimes to a fault. He was slow to see the weakness or ineffectiveness of some senior executives who looked good, sounded good, and actually did little or were indecisive. In short, he tolerated less-than-stellar performance.

It didn't serve the company well when the world began to unravel. Rick found it difficult to order tough calls, like downsizing dealers or cutting brands. He frequently talked about the desirability of the latter yet never imposed his will against resistance, including my own. A magnificent human being, Rick was simply too nice, too introspective, and too thoughtful in many of his actions to see the company through the turbulence of 2008-2009. He was the perfect "peacetime" CEO. His strategy was impeccable and he should have been more successful, but bad timing, bad luck, and the weight of still-unexpurgated GM (gm) costs and cultural traits proved his undoing.

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