Good Leaders, Bad Leaders

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Car guy Bob Lutz sorts ’em out.

By Matthew Budman

Good Leaders, Bad Leaders

Matthew Budman is editor-in-chief of TCB Review.

Bob Lutz has spent close to half a century working for and alongside the men running much of the auto industry—and he’s kept track of what strategies work and which don’t, which leadership strategies are effective and which aren’t, which CEO foibles are irritating and which are fatal. For him, there’s nothing theoretical about leadership—it’s embodied by real-life people tasked with getting things done and inspiring followers.budman3

In Icons and Idiots: Straight Talk on Leadership (Portfolio), Lutz profiles eleven men who influenced him and his career, from a high-school teacher and a Marine staff sergeant to former CEOs of BMW, Ford, Chrysler, and GM. He doesn’t go easy on those who are still alive—or those who are no longer with us. Indeed, Lutz rarely pulls punches aimed in any direction (on jailed Exide CEO Art Hawkins: “It’s hard to say any nice things about Art”), which makes his anecdotes and reminiscences more pointed than most. That’s important to him: For a hard-nosed lifelong executive, he seems committed to making business books entertaining. “My father was still alive when I wrote my first business book, and he said, ‘Congratulations and all that, but I was really sort of hoping for something of somewhat higher intellectual content, something that would make a contribution to the science of business.’ I said that’s not the kind of book I want to write—I want to either educate while entertaining or entertain while educating. If a book isn’t fun to read, why bother?”

Lutz, 81, spoke by phone from his Detroit-area home, in his first interview for this magazine since we spoke with him for a Q&A back in 1999.

You’ve worked with many different types of leaders, and you find strengths and weaknesses in each. Is it possible to generalize and suggest which type is most effective in which situation?

There’s no such thing as an omnivalent leader who is able to direct a large organization in all circumstances. I know that I would be a good leader in maybe 75 to 80 percent of circumstances that a company finds itself in, but, for instance, if a company is facing Chapter 11 and needs to restructure radically and quickly, get rid of debt, negotiate with creditors, and stop payments on a lot of stuff, that’s something I’m not suited for. The company needs a work-out specialist, somebody like Kevyn Orr, the Washington bankruptcy lawyer who has been appointed as the emergency manager of Detroit. It’s like an emergency-room physician who says, “If this patient is gonna live, we’re going to have to amputate both legs and an arm.” I’m better at building things out and creating new products.

I think the people who are heavily financially oriented and brilliant balance-sheet analysts are probably best in banks, insurance companies, financial-services companies, and so forth. Then you’ve got leaders who are charming, who respect people, get along with everybody, and don’t push—they’re highly qualified to be university presidents. And then you’ve got your outgoing marketing types who are extremely aggressive, very willing to accept risk, and those are ideal people to lead companies that want rapid growth, but they need the checks and balances of a strong financial organization.

Leading an industrial company requires an interesting combination of traits: A person has to be aggressive, smart, and somewhat numerate. In my book Car Guys vs. Bean Counters, I wrote that a consumer-products company cannot be effectively run by nothing but finance people—you’ve got to have creative people who are passionate about the product, and the finance people have to come in behind to keep them on the right track and act as the brakes.

One of our recurring themes in this magazine is that big companies have become too sprawling and diverse to get a handle on, and the CEO job today requires too many different skills for one person.

I agree. That’s why a good CEO will not adopt an overly dictatorial style. That was the beauty of the relationship I had with Rick Wagoner at GM, who was without question the best balanced, most normal, easiest-going CEO I ever worked for. He never had “CEO disease”; he didn’t care whether his airplane took off before the other airplanes. He didn’t constantly scheme ways to get more pay, more options, more grants. He said, “We serve the shareholder. We’re being paid adequately. The board will decide if it’s time for more.”

The one thing he lacked, when things got really tough, was that he found it difficult to tackle the really painful decisions. He was such a consensus-driven executive. He knew what he wanted, and he articulated what he wanted, but when the predictable resistance came, he was overly respectful of other people’s opinions and would say, “Well, I still would like to do this, but if you all think it’s not the right time or isn’t what we should be doing, maybe we shouldn’t.” And then nothing would get done.

That’s an uncommon criticism: that a CEO is “overly respectful” of others’ views.

Listen, when you’re running something and it’s an emergency situation, that’s when the pilot of the airplane or the captain of the ship says, “Everybody get out of my way—here’s what we’re doing.”

Are some people who rise to leadership positions simply bad leaders, ineffective in any situation?

I saw a lot of those people at Ford. They would have great educations, dress well, speak well, behave exceptionally well in meetings, were always well prepared, and have answers for everything; they would be promoted so fast that they were never measurable in any one job; they’d spend eighteen months in one job before their next promotion. And they’d finally get into a position where I was either working for them or working with them, and I’d ask myself, “How did this person ever get up to a position like this?” And the answer was: looks good, sounds good, faces upward brilliantly.

Of course, none of the eleven leaders you profile is quite so smooth. In your experience, are people fairly consistent in their personal and public lives? That is, if they have personality quirks, do those come through in their leadership style?

In the cases of Phil Caldwell at Ford and Ralph Mason at Opel, very definitely. Red Poling at Ford and Eberhard von Kuenheim at BMW, sure. Von Kuenheim was an extremely smart person, but spending some of his youth as a displaced person in the Soviet zone of Germany, and having to escape, honed his ruthless survival skills and brought him up with a deep distrust of what other people say and do. It made him a control freak and very hard to work for. But he was a brilliant CEO; he was in office at BMW for over twenty years, the longest-serving CEO in automotive history, and took BMW from roughly 200,000 units a year to two million units a year.

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The Conference Board Review is the quarterly magazine of The Conference Board, the world's preeminent business membership and research organization. Founded in 1976, TCB Review is a magazine of ideas and opinion that raises tough questions about leading-edge issues at the intersection of business and society.