Car Guys vs. Bean Counters: The Battle for the Soul of American Business
Roger L. Martin
Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL
(Harvard Business Review Press, 2011)
Adapt: Why Success Always Starts with Failure
(Farrar, Straus and Giroux, 2011)
As the tumultuous decade of the “noughties” fades into history, the battle lines for the future of Western management practice and thought are becoming clearer. Each of the best business books on the topic of management reviewed this year sheds some light on where and why we went off the rails, and what we should do about it. One book’s author is a respected U.S. auto company executive, another is the dean of a Canadian business school, and another is a British journalist. They come at their subjects from very different perspectives, but all their views are insightful, and the overlaps among them are intriguing.
A Detroit Swashbuckler
In Car Guys vs. Bean Counters: The Battle for the Soul of American Business, veteran auto company executive Bob Lutz uses his varied experience in Detroit, particularly his nine years as vice chairman of General Motors Company, to show how the U.S. auto industry lost its soul and is trying to recover it. Lutz is a former fighter pilot and a self-confessed “right-brained car guy” with a multicultural background unusual in Detroit (he was born in Switzerland and worked extensively in Europe). He has been described as an opinionated swashbuckler, and he lives up to that reputation in this book, with his outspoken views and entertaining turns of phrase.
Lutz dates the decline of GM to the 1960s, when, in the interests of volume and cost efficiency, the design function was progressively subordinated to the “empire” of finance and accounting, eventually ending up under the auspices of product planning. Instead of producing cars that were objects of passion, he says, “the system created research-driven, focus-group-guided, customer-optimized transportation devices, hamstrung in countless ways.”
Lutz’s firsthand description of the charisma-challenged, nitpicking, customer-distant “culture of excellence” that GM developed makes for painful reading. He reports how attempts to adopt brand management practices from the consumer packaged goods sector failed because of the much larger scale and longer time frames in the auto industry. Worse still, according to Lutz, GM’s elaborate Management by Objectives–based Performance Management Process (PMP) was a “ritualistic time suck” without “a smidgen of customer value.” PMP allowed senior managers to hit all their numeric targets and earn bonuses, even as GM steadily lost market share. “[A] senior executive who needs a quantified list of objectives to know what he or she should be working on should not be a senior executive in the first place,” he writes.
Not all GM’s wounds were self-inflicted. Lutz is highly critical of the government’s CAFE (corporate average fuel economy) regulations, which warped the market toward trucks. He also accuses U.S. politicians of failing to bite the bullet and impose a gas tax, which would have raised domestic gas prices to world levels and encouraged drivers to switch to more economical vehicles. Although he is a climate-change skeptic, Lutz says he would raise gas taxes by 25 cents per gallon annually until parity with other countries was reached, just to reduce the country’s dependence on foreign oil. In addition, he blames the U.S. government for allowing Japan to maintain an undervalued yen for many years, granting its auto companies a strong foothold for exports before they established U.S. manufacturing operations.
Lutz is equally scathing in his denunciation of the media for what he considers its knee-jerk badmouthing of domestic cars. And notwithstanding his own MBA, he reserves his heaviest salvos for business schools. He argues that their sense of academic inferiority has led to the “needless intellectualization” of business — an economics-influenced perspective from which the customer is never discussed. As a result, the customer has become a “hapless victim” of “MBA bean counters”; any successful products are likely to be value engineered (read: cheapened) to generate short-term gains and long-term disasters. “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,” he declares. “They have produced generations of number-crunching, alternate-scenario-loving, spreadsheet-addicted idiots-savants. They should be ashamed.”