Lutz Out At GM; Legacy "A Total Crock Of $#!%"

[Brad Kenney]

Just read the news that Bob Lutz, GM vice chairman and auto enthusiast, is going to retire. What's sad about it is, here's a guy that by most accounts brought a sense of focus and great feel for classic American design to GM's lines; however, every single announcement that I've read references his unfortunate comments to D Magazine last year, in which he said this (and here I quote my last post on the topic):

Global warming is a “total crock of ****.” Then he added: “I’m a skeptic, not a denier. Having said that, my opinion doesn’t matter."

Don't know about you, but that sounds suspiciously like denial to me, but maybe I'm misunderstanding the colloquial meaning of his colorful terminology.

He also says that hybrid cars like those made by Toyota “make no economic sense,” because their price will never come down.

Unlike Mr. Lutz, I'll choose my words carefully, and say that neither I nor anyone else (much less an old-line Detroit-based car guy) can say with absolute scientific certainty whether the phenomenon popularly known as "global warming" is actually happening or not. However, at this point in the Smog Age, I don't think anyone would say that humans haven't impacted the climate -- or if they did, they'd be dipping out of Lutz's own crock.

And as I concluded at the time:

But with all due skepticism, whether or not something called/not called global warming/climate change of one form/another is/is not happening, is this really the guy that GM shareholders want behind the wheel of this (or any) company's strategic direction?

My take? We need some new drivers over at the Big 3.

I really don't care what Bob Lutz thinks about climate change. I do care that a company of which I am now an unwilling sponsor is run by smart, market-savvy executives who know what their customers want before they want it, much less know how to run a company in the new media age. As the MIT Technology Review put it today:

Lutz added, according to D, that "my opinion doesn't matter." But how could that be, with GM gearing up to woo environmentally minded consumers with advanced vehicles such as the plug-in hybrid Chevy Volt? Such comments reverberate louder still within the industry itself, signaling to junior engineers that an environment-be-damned ethic endures in Detroit's boardrooms.

It looks like a drivers seat is opening up at GM. Couldn't come a moment too soon.

[rbrooku]

I've said it before and I'll say it again, "Harvard MBA's" are trained to ruin businesses for self-profit, not run them well for the sake of the greater good. It is in the nature of most American business school training to teach how to manipulate reports for the sake of the stock price rather than to excell with the goods and services of any given business.

Take Saturn, an innovative car when it was introduced. The plastic panels were unique and I can recall while talking to a friend from New Zealand about Saturns when he asked what made them unique. I walked up to one parked near us and kicked it hard with the toe of my shoe. When he looked and saw no damage he said, "Impressive". Now Saturns will cease in 2012 because the "Harvard MBA" bean counters who ran GM failed to continue to invest in innovation at Saturn. Just plain stupid that there are so many, many examples of this behavior throughout American business and it is so little recognized. Everyone is so impressed with the big salaries and stock options the top execs and board members give themselves and everyone pays so little attention to the long run fate of the companies these marvels of American business schools bleed through pumping up the stock while cutting the progress of innovation in goods and services.

Name any big American company in trouble and its the same story. Name any big American company not in trouble and its just the same story at an earlier stage in the process.

It would be comical if it wasn't so stupidly tragic.

[wesdavidson]

I have observed that two types of people build great companies.
(1) the founder, if he uses the money and position as tools to provide great products, and always look to the future - with some common sense and uncommon luck.
(2) A hired manager (or heir) who realizes that he is hired to build and run a company. He must act and make decisions based on the long term, and many times against his own short term interests.

The present problems are tracable to personal greed and the failed crackpot theories of "Ayn Rand" (an assumed name) and her followers - Milton Friedman etc.

[Brad Kenney]

Full disclosure -- I drive a Saturn -- a 1998 SL2 that I bought after 9/11 (wanted to Buy American) and haven't been disappointed in the slightest -- still running great, 10 years later, and I stilll get 30+ MPG highway. Why GM would let Saturn atrophy and die out of their lineup is beyond me.

@wesdavidson -- I agree that the long-term view is absolutely essential to the successful management of any firm. I've got a blog post I've been formulating, based on what I've been learning in business school, that contrasts the rise of the rootless, stateless "celebrity CEO" with the decline in the world's fortunes. (Coming soon.)

And Ayn Rand's books -- objectively speaking -- were written to provide morally-challenged morons with reinforcement for their own innate selfishness. She was the Fox News of the mid-20th century. It'd be sad and sort of amusing if her proteges (Friedman, Greenspan, Clarence Thomas et al) hadn't just about ruined the entire world.

[wesdavidson]

I drive a 93 ford explorer with 270,000 miles. No major repairs. My wife drives a Dodge 1500. - despite what some folks say, American companies can build great vehicles.
Ayn Rand was the product of the disastrous European politics and economics of the 1920's to 40's. I see nothing there to emulate, then or now.

I see much to emulate in GM, Ford, Walter Chrysler, Brown and Sharp, Singer, Moore Special Tool company, Newport News shipbuilding, Douglas, Boeing, and others of the same time period.

More recently, the Yamazaki (mazak), Honda, and Haas groups. All have been run by capable CEO's or capable division heads. Lots of positive things to learn.

Knowledgable people at the bottom of a company do the actual work, without them the machinery of a factory is just a junk yard in embryo.
Knowledgable people at the top keep machines and supplies coming in the doors, and keep the products relevent and SOLD. Money is the tool that used to keep everything running.
Sometimes a manager forgets that his job is to manage the long term investments of plant material, labor lifetimes, stockholder money, and yes, customers confidence in products. When that is forgotten, then many think they are there only to extract some cream for the short term stock speculator and temporary managerial mercenaries, Then the company is destroyed.
Milton Friedman wrote that corporations existed only to make money for the stockholders, this has been used as an excuse to manage companies for the benefit of short tem investors and managers at the expense of long term investors, customers and employees.
I think I would be at least not incorrect to suggest that the right to set up a corporation and sell stock to the public is based at least in part on the idea that corporations exist to, in addition to making money, promote innovation, create, develope, produce, and support products, and provide employment, and pay a fair tax to support the infrastructure that they use. Milton was wrong - or at best incomplete.