My Take on Bob Lutz

[jlmartin99]

Originally Posted by mgescuro

My Take on Bob Lutz
…Another Commentary by mgescuro…

Bob Lutz: Author, Marine, Businessman?
Bob Lutz: GM’s Savior?
Bob Lutz: Car Czar?
Bob Lutz: Man of the Year?
Bob Lutz: Complete Phony?

Depending on who you ask, it could be any one of those, and then some.
So what is so important about the Head of Global Product Development at General Motors?
In my eyes, Bob Lutz is responsible for ONE thing and ONE thing only at GM – Reworking GM’s processes for product development, design, and engineering.

When Mr. Lutz first arrived at GM, the entire product development process was in shambles. GM had forgotten how to design and build proper cars. Cars were a complete sea of grey and cheap plastics, incapable of competing with far better foreign competition. GM’s product design was a conglomeration of fiefdoms – in Europe, in Asia, and in the Americas. Neither fiefdom knew what was going on in the other fiefdom, and thusly, you had repeated design and engineering efforts. One of the best examples of that was the Epsilon platform.

First order of business for Mr. Lutz... Eliminate the fiefdoms. This resulted in a complete restructuring. Axing a number of department heads, flattening structures, eliminating and consolidating businesses, etc. In essence, Lutz instigated a cultural upheaval and revolution at GM. Where GM had a traditional and sequential development processs (Design => Engineering => Procurement => Manufacturing => Sales) he began transforming GM into a more efficient Platform organization process. Where as GM had compartmentalized sections for product development, with one section being unable to start until the other section had finished or revised, a platform organization is more efficient with all divisions working at once. Now GM’s product development division is organized by mid-sized platforms (Europe), sub-compact/Compact cars (Daewoo), full-sized (Holden/US), trucks/SUV (US). It utilizes the strengths of each region, while allowing for greater efficiencies. Lutz also allowed competition for “Best Designs,” as it creates friendly competition and pride in ones work. All of which was lacking at GM.

In my view, that is Lutz’s single most important contribution to GM. The complete overhaul of product development should serve GM well for decades to come

But has Lutz been able to adhere to his own “Immutable Laws of Business?” Let’s take a look.

Law 1: The Customer Isn’t Always Right
I believe GM has managed to follow this.
Customer: We need more fuel efficient cars.
Media: We need more fuel efficient cars.
GM: Here – Have the GMT-900’s!!
Media: *Rant* *Rant* *Bitch*
Customer: Oooo… 2 mpg more, nicer interior…. Here’s my deposit.
Be a little courageous…. Be a little daring…. Build a competent product, and the customers will come.

Law 2: The Primary Purpose of Business is Not to Make Money
Best said by Lutz in his book, “Guts.”
“Great profits are products only one way – by great products. And great products derive from enthusiasm turned loose…”
I think GM is still in the primary stages of this. But we’ll see.

Law 3: When Everybody Else is Doing It, Don’t!
Well, GM avoided doing hybrids, based on their experience with the EV1.
Fad avoidance? Perhaps.
Lutz says to “keep focus” and “Let your brand or product stand for something specific.”
Again, GM is still in the primary stages of this.
Also, he sates, “Don’t fall prey to ‘the dilution solution’...” Unfortunately, we still have bad and sorta-bad rebadges: Acadia/Outlook, Equinox/Torrent, Cobalt/G5. So there’s still work to do.

Law 4: Too Much Quality Can Ruin You
Trying to get to 0 errors will kill you. But in today’s market, customers expect and demand both exhilarating performance and quality.
GM’s focus on the interior has grown by leaps and bounds. GM’s overall quality reputation is matching or exceeding those of most Japanese benchmarks. So through the customer’s eyes, GM is finally gaining some ground on the “quality” front.
But again, there are still a considerable number of GM cars that have fallen behind the curve, and require a major refresh, earlier than schedule.

Law 5: Financial Controls Are Bad!
Being a little smarter with development, can spread the costs throughout entire divisions and platforms. Instead of cutting and slicing costs by 10-20-30%, cutting or consolidating redundant proactices can realize the same or greater financial savings, keeping development running at 100%.
Well, seeing as GM is going to cut approximately $8-9B MORE in 2007, it is no doubt this is exactly what GM is doing. To my knowledge, product development is not slowing down. In fact, they are gaining more funding. What they do remains to be seen.

Law 6: Disruptive People Are an Asset
Being able to stand up in a corporate setting and have a dissenting voice takes a lot of courage. But doing so can show an entirely different path to success. Allowing the designers to stand up and say something is “wrong.” Or allowing the factory worker to stop the line and point out something is what GM needs to improve. I believe a lot of this was set in motion, but this is a major cultural change that will take years to disseminate through the corporation.

Law 7: Teamwork Isn’t Always Good
Badly managed teams do not work effectively and don’t get work done. To make it work you need strong leadership and strong vision.
With Lutz as head of Product development, he is providing the vision and the leadership to the platform department heads. End of story. One vision... One voice... And you get all cylinders moving in harmony and everyone moves in the right direction.

Concluding Thoughts
Taking a look at what Mr. Lutz has put into place, it looks like he ascribes to his own “Laws of Business.” And for the most part, I tend to agree with the changes he has put into place.
Whether or not this continues to be the case once he retires from GM remains to be seen. Whether it is enough for GM to sustain its ability to remain a going concern? I cannot answer that definitively. But maintaining its present course is necessary. However, I do believe it needs to go much faster than it is currently progressing.

Bob Lutz has been able to turn GM's product development process into a leaner machine, able to keep up with most of the foregin competition. That has been his primary responsibility. The new cars that are appearing now are made under the new regime. The changes have come about 3 years too late. But they are coming.

If Bob Lutz is remembered for one thing, it should be for his rebuilding of GM's design and product development. The cars he has come up with is a matter of taste. But I for one am glad of the processes and changes Lutz has put into place at GM. These are long term solutions to GM's continued ineptitude. And it's only a matter of time before solid product becomes commonplace at GM -- with or without Lutz.

Greetings mgescuro,

Thanks, a very thoughtful write up. GM's product transformation has a ways to go, but in my view Bob's position as the ultimate product executive in GM is what was needed and Bob himself is a plus. GM has more brands to manage and build an image for, not an easy task in my view. GM's products are improving and auto buyers will determine how successful the new designs are.

JLM

[mgescuro]

Originally Posted by Pontiac-Custom-S

WOW, "One vision, one voice", now where have I heard that from???? Thinking, thinking, ahh, The Borg Queen from Star Trek. I think Mr. Lutz just might be a Trekkie. All he has to do now is perfect the Vulcan Mind Meld and call it the GM Mind Meld and send his thoughts to all of GM, "My mind to your mind, your mind to my mind"!

FUNNY!!! I've been going through the entire Voyager set this Xmas holiday. (I had nothing to do.) And I've been up to my neck in Star Trek.

One vision, one voice
My mind to you mind
Resistance is futile
Please state the nature of the medical emergency.



But anyways, it is true. One focused goal is most efficient. Like my friend told me last night, "GM is in every market, but a leader in none." Focus will get GM back to leadership.

[mgescuro]

Originally Posted by mkaresh

Interesting editorial. But how do you know these things?

I ask because one thing I learned when essentially living inside GM back in 1996-97 was that the stories in the press bore very little resemblance to what was going on inside the corporation. So you cannot be sure of anything from what you read in the press.

Is there anyone here who is actually inside the GM product development organization, and who can report what is actually going on there?

Even when I was there, development was no longer sequential. Saying that was the case is a fallacy. I spent time inside both engineering and design, and they were developing vehicles concurrently.

Coordination with Europe was a mess then. But let's wait for some actual products to emerge before concluding that this has changed.

Finally, is it true that cars are no longer developed in the U.S., and that only trucks are now engineered here? This is implied by the editorial, but I find it hard to believe.

I've posted this before, but one more time won't hurt. My conclusions based on my fieldwork inside GM:

http://www.truedelta.com/execsum.php

A Ford engineer recently emailed me to say this perfectly describes the problem within Ford today. A key theme of my dissertation was the frustration experienced by engineers, and what might be done about it.

A lot of it is based on the media and article written about GM. There were a lot of little feifdoms in and around GM. Saab did its own thing. The US did its own thing. Europe did its own thing. I mean, how else could GM start of with one common architecture -- Epsilon -- and end up with 5 different derivatives?? US SWB, US LWB, Saab, Opel, Alfa. All of that is from interviews from Lutz from a few years back.

Also, taking a look at Lutz business history, and how he is changing GM's internal operations (again from media and press articles) shows that Lutz is in fact changing GM's internal structure to match what he had done prior at Chrysler. He's removing the "silos," flattening it, and creating a "scrum" environment (for those familiar with software development).

Is the media 100% accurate? Probably not. Nothing can be accurate enough unless it comes directly from the HR and Finance departments at GM. But it is accurate enough that anyone can extrapolate the corporate structure at GM.

Development for small cars are now centered in Asia/Daewoo. Midsizers are (or will be) centered with Europe/Opel. Full-sized will be centered in US/Aus. Trucks/SUVs in the US. It is a complete reworking and flattening of the product devleopment infrastructure. This is how GM realizes multi-billion dollars in savings. There is no other way -- functionally or structurally -- without outsourcing or a JV, which they obviously have not.

[mkaresh]

Press articles claimed that the fiefdoms had been eliminated before Lutz, based on executive interviews.

One thing you need to realize about any GM executive is that they don't really know what goes on at the working level. They know what goes on at their level, and one up and one down.

It's not just like this at GM. It's like this at just about any company, even small ones. People here who work in company of 50+ people: how much does your boss' boss know about what you do?

Exactly how many levels has Lutz removed? I haven't heard of any specific levels that have been removed.

The problem wasn't so much the levels when I was there as the level and clarity of the communication among them, and the way incentives were structured to prevent rather than promote cooperation. Perhaps Lutz has made large improvements in these areas, but calling it "flattening the organization" is an oversimplifying cliche used for public consumption that doesn't mean a whole lot when you get down to it.

[mgescuro]

Originally Posted by mkaresh

Press articles claimed that the fiefdoms had been eliminated before Lutz, based on executive interviews.

One thing you need to realize about any GM executive is that they don't really know what goes on at the working level. They know what goes on at their level, and one up and one down.

It's not just like this at GM. It's like this at just about any company, even small ones. People here who work in company of 50+ people: how much does your boss' boss know about what you do?

Exactly how many levels has Lutz removed? I haven't heard of any specific levels that have been removed.

The problem wasn't so much the levels when I was there as the level and clarity of the communication among them, and the way incentives were structured to prevent rather than promote cooperation. Perhaps Lutz has made large improvements in these areas, but calling it "flattening the organization" is an oversimplifying cliche used for public consumption that doesn't mean a whole lot when you get down to it.

The only way to know for sure is to find an HBS Case for GM. I no longer have access to that resource, unfortunately, nor would discussing an HBS Case be on the appropriate level for GMI.
So, having this type of posting on GMI, in terms of "oversimplification" is necessary.

Lutz has eliminated the "country managers," among other levels in product development and consolidated operations. I lump all that under "flattening the organization." There are instances where Lutz has gone directly down to the designer level. So Lutz does in fact have full control, should he exercise it. Does he know exactly what Joe Blow Assistant designer in one corner of a room at Daewoo is doing? Probably not. That's micro-management. It's not efficient. But I'm willing to bet that he knows exactly what Daewoo designers are doing, which is a whole hell of a lot better than what it was when GM ended up with 5 separate Epsilon platforms, each not being compatible with each other.

I work for a company with 400 people. My boss knows exactly what I'm doing. (I report directly to him.) He's a VP. He also knows exactly what BusDev, Ops, QA, Marketing, and BI are doing. Does he need to know exactly what Cathy in BI is doing? Nope. But he knows what BI is up to.

[mkaresh]

Is there an actual HBS case on Lutz at GM? If so, I can probably get my hands on it, and would be interested in reading it.

When I was in there, the way GM executives described how the organization operated and the way it actually operated were two very different things. Maybe this has changed. But you wouldn't believe how many people have seen my findings on GM and then told me how much it described their own company, often a company much smaller than GM. I saw the same things go on at a company where my wife used to work, which had fewer than 50 people.

You'll know things have changed when people are no longer promoted based on their ability to give a Powerpoint presentation.

Finally, understand that I was in the design studios a number of times when executives came through. Everyone shut up for the most part. And what was said was pretty much what people thought the executives wanted to hear.

There were two design execs at the time. One would come through and never say a word while in the studios. I'm trying to remember if I ever heard his voice. After he left, people would try to interpret his facial expressions and body language. Or, if he left early, they'd wonder if it was something he saw or that they said. The exec was brilliant, he had a lot of good "big ideas." But as a communicator and a leader he was awful.

The other design exec would come through and the designers would listen as he made suggestions. They'd pretend to agree with them. Then, after he left, they'd discuss how wrong or useless nearly all of these suggestions were.

Hell of an environment to operate in. It gave us the Aztek, by the same guy who gave us the C6 Corvette and the next Camaro. How many people here have called for that guy to be fired? But it wasn't his fault.

Clearly things are better inside GM today. But I wonder how much better. There was so much room for improvement, and I doubt they've realized more than a portion of it.

I have been in the same room as Lutz once, even introduced myself and shook his hand. I did not witness warm interactions. Everything still seemed plenty formal and stiff. Lutz seemed like he wanted to get away from them all. But that was back in 2002 or so. So things have no doubt progressed beyond that point.

[uboys]

Originally Posted by mkaresh

Is there an actual HBS case on Lutz at GM? If so, I can probably get my hands on it, and would be interested in reading it.

When I was in there, the way GM executives described how the organization operated and the way it actually operated were two very different things. Maybe this has changed. But you wouldn't believe how many people have seen my findings on GM and then told me how much it described their own company, often a company much smaller than GM. I saw the same things go on at a company where my wife used to work, which had fewer than 50 people.

You'll know things have changed when people are no longer promoted based on their ability to give a Powerpoint presentation.

Finally, understand that I was in the design studios a number of times when executives came through. Everyone shut up for the most part. And what was said was pretty much what people thought the executives wanted to hear.

There were two design execs at the time. One would come through and never say a word while in the studios. I'm trying to remember if I ever heard his voice. After he left, people would try to interpret his facial expressions and body language. Or, if he left early, they'd wonder if it was something he saw or that they said. The exec was brilliant, he had a lot of good "big ideas." But as a communicator and a leader he was awful.

The other design exec would come through and the designers would listen as he made suggestions. They'd pretend to agree with them. Then, after he left, they'd discuss how wrong or useless nearly all of these suggestions were.

Hell of an environment to operate in. It gave us the Aztek, by the same guy who gave us the C6 Corvette and the next Camaro. How many people here have called for that guy to be fired? But it wasn't his fault.

Clearly things are better inside GM today. But I wonder how much better. There was so much room for improvement, and I doubt they've realized more than a portion of it.

I have been in the same room as Lutz once, even introduced myself and shook his hand. I did not witness warm interactions. Everything still seemed plenty formal and stiff. Lutz seemed like he wanted to get away from them all. But that was back in 2002 or so. So things have no doubt progressed beyond that point.

You must be a parent. What with the "Wet Blanket of Sense" you bring to every thread. You are always very calm, measured and thorough.

That said, I can tell you that my own sense of progress at GM is gleaned from tiny hints here and there that by themselves amount to nothing (mixed with a little hope).
I guess we will just have to wait and see, but I just cannot help but agree with mgescuro. Somehow I think he is right--and I can't really explain why.

[mgescuro]

Originally Posted by mkaresh

Is there an actual HBS case on Lutz at GM? If so, I can probably get my hands on it, and would be interested in reading it.

Nope. None on Lutz. But there is one on GM Strategies, "General Motors: Acting Strategically?" That might prove to be an interesting read.

Originally Posted by mkaresh

You'll know things have changed when people are no longer promoted based on their ability to give a Powerpoint presentation.

I guess I've been lucky to never have been hired at a company that was run that way... well.. that Dot-Com I was in. There was no need to have 40+VP's. Many of whom were complete idiots.

Originally Posted by mkaresh

The other design exec would come through and the designers would listen as he made suggestions. They'd pretend to agree with them. Then, after he left, they'd discuss how wrong or useless nearly all of these suggestions were.

Well, there are a lot of "Dilbert-isms" out there. I'm sure GM's not immune.
Ultimately, if GM is to succeed, they need to change culturally. Designers need to speak up. (Lutz's 6th Law.) Not easy to do, when year after year, this was never done. But as time moves on, the comfort level increases, and I believe you'll see some great things coming from GM Design.

Originally Posted by mkaresh

Hell of an environment to operate in. It gave us the Aztek, by the same guy who gave us the C6 Corvette and the next Camaro. How many people here have called for that guy to be fired? But it wasn't his fault.

Actually, the Concept Aztek was fine. It's when it made its way to the showroom where all the stupidity came in. And I think that's where the communication disconnect came into play. GM had something good in that concept. But then "something" happened... and we had the wonky Aztec we all know and hate.

but anyways, I think the only way GM can really turn the ship is not just to build better cars... not just to lower costs... but to actually change how the company operates fundamentally. A complete overhaul in GM's corporate culture will assure GM remaining a going concern. This is why Toyota is so successful and why Toyota's system cannot be duplicated.
And I believe Lutz is the catalyst for this change.

[mkaresh]

I'm not necessarily disagreeing with anyone here, and certainly not mgescuro. But I've learned to be skeptical, and I'd love to see some real evidence.

I am a parent, have three young kids. But I'm not sure that has anything to do with it. There are better parents out there. I'm stretched pretty thin.

Mostly what you see here is just experience combined with an open mind. I've been observing, thinking about, living in, and advancing hopes for this industry and GM in particular for nearly 25 years.

It'll be obvious when things have truly changed. GM has been improving, but we're not there yet. Look no further than the door panels on the Aura. In an organization that was properly functioning, they would not have happened.

Instead, we have the press spouting crap about the Aura being essentially a rebadged Opel. If the truth is sufficient, there's no need for b.s.

[CobaltSScrazy]

Originally Posted by uboys

You must be a parent. What with the "Wet Blanket of Sense" you bring to every thread. You are always very calm, measured and thorough.

That said, I can tell you that my own sense of progress at GM is gleaned from tiny hints here and there that by themselves amount to nothing (mixed with a little hope).
I guess we will just have to wait and see, but I just cannot help but agree with mgescuro. Somehow I think he is right--and I can't really explain why.

haha, I've had the same thoughts as you about Mgescuro. BTW- this may sound unintelligent, but whats an HBS case? Can someone elaborate on that?

I'm encouraged by what Bob Lutz does but he should be grooming his replacement as his age/health will just continue to go and a select group of strong young personalities that have a tap on Gen X/Y need to be in place.

CobaltSScrazy

[mkaresh]

An HBS case is a Harvard Business School case study. They are used as teaching tools in business schools.

Essentially, a professor or three interviews a handlful of company execs about an issue that faced the company and how they dealt with it, then write up the results. They go into a bit more depth and are a bit less whitewashed than press articles. But they still tend to be tremendously oversimplified and contain more than a smattering of what execs thought happened or want to believe happened, which can be very different from what actually happened.

The only way to know what really happened is to be there, and this is rarely part of the method.

[CobaltSScrazy]

Originally Posted by mkaresh

An HBS case is a Harvard Business School case study. They are used as teaching tools in business schools.

Essentially, a professor or three interviews a handlful of company execs about an issue that faced the company and how they dealt with it, then write up the results. They go into a bit more depth and are a bit less whitewashed than press articles. But they still tend to be tremendously oversimplified and contain more than a smattering of what execs thought happened or want to believe happened, which can be very different from what actually happened.

The only way to know what really happened is to be there, and this is rarely part of the method.

why an HBS? Why not a Wharton case study of a Ross case study (Go Blue!!!)

THank you for the explanation though. Reflecting upon it, you seem to be right. You don't really know a person till you eat a pound of salt with them and walk in their shoes a mile, or so I've been told before.

CobaltSScrazy

[mkaresh]

Other business schools do publish case studies. But this teaching method originated at Harvard, and was/is the primary method there, so they're best known for it. They also have the largest share of the market, as the innovator often does. When I was at Wharton as an undergrad, we mostly used case studies from Harvard.

If you want to see one, go to any large book store and find a Harvard Business Review. Each issue contains a case study. Noticed today that CostCo also carries the journal, at least the one where I was shopping, for 30% off.

If you want to read the best account I've seen of how things happened inside GM back in the 1990s, read Jim Schefter's book about the development of the C5 Corvette, "All Corvettes are Red." Better than any case study.

After he was there, GM Design said they'd never let an outsider inside again. Then I got in, for six months. Near the end one of those design execs finally learned who I was, came up to me and said, "So you're here to write another Corvette book..." I wasn't, but I found it very interesting that we'd been in the same room together many times, and he'd never really known who I was.

Funniest incident was a time this exec took the design team into a small room to have a discussion. To give everyone a bit more room I stood just outside the door to listen and take notes. The exec saw me standing there, figured I needed to use the room, and pulled everyone out of that room and took them to another one. Everyone just followed him, not bothering to correct his misperception.

[mgescuro]

Originally Posted by mkaresh

Mostly what you see here is just experience combined with an open mind. I've been observing, thinking about, living in, and advancing hopes for this industry and GM in particular for nearly 25 years.

It'll be obvious when things have truly changed. GM has been improving, but we're not there yet. Look no further than the door panels on the Aura. In an organization that was properly functioning, they would not have happened.

Instead, we have the press spouting crap about the Aura being essentially a rebadged Opel. If the truth is sufficient, there's no need for b.s.

Well, the first post was just an initial commentary/editorial on my take on what Lutz is doing at GM. Or at least what I believed Lutz is doing at GM, based on media sources and based on Lutz's on interpretation of business.
I thought it would be an interesting look at GM, based on Lutz's own business "laws." And one could extrapolate the known internal changes at GM and place them into the context of Lutz's laws. Not that it is a "correct" interpretation, but it is certainly a viable one based on known information.
Now, if I could find more accurate information (1st hand data), then sure, I can revise the commentary. But I believe that Lutz's changes are the core of GM's future success. And the ability of those changes to stick after Lutz leaves will determine GM's success.

Yes, the product isn't 100% there yet. But progress is being made. Was GM's product development division so incredibly inept before that they couldn't design/build a car? Well, according to Lutz statement, it was. But as the changes settle in and the culture changes, the product will improve and improve.

Yes, the door panels on Aura shouldn't have happened. But they did. And to save money they had to do it. Hopefully, the next-gen Aura won't have those short-comings. For all intents and purposes, the next-gen Aura is probably already on the drawing board. We'll see.

Besides, the Aura isn't a Vectra. it may look like it... but it's not one. It's a G6 with a European skin. The next-gen Aura needs to be 100% Vectra, so it can rightfully compete with Passat. Leave Camry/Accord to Malibu and G6.

[mkaresh]

My personal weakness is that I'm a lateral thinker prone to tangents. By all means let's get this thread back on track.

I'm off to bed now. I read Lutz' book a few years ago, liked much of it, disagreed with some of it. One thing to realize is that Lutz' approach alone yields Chrysler -- poor quality and a lack of thorough design. A blend between Lutz' approach and GM's traditional disciplined approach is best. I believe that Lutz himself realizes this, it's a reason he's content to play right hand to Wagoner.

If I can find the time I'm leaf through the book again, there's a lot to discuss there. Anyone else here have it handy?